Econet's mobile plans lagging

By PETER GRIFFIN telecoms writer

The business case for a third mobile phone operator is looking increasingly shaky now that Econet Wireless is unlikely to launch before 2004.

Econet, which has its headquarters in South Africa, surprised the local market last year when it announced plans to use 2.5G radio spectrum - bought for $10.2 million in Government-run auctions - to launch a service rivalling those of Telecom and Vodafone in the second half of this year.

The company scored a coup by also securing rights to "third generation" spectrum through the Government-funded Hautaki Trust, which took a 30 per cent stake in Econet in return for use of its spectrum.

Econet's managing director, Tex Edwards, said consent had to be obtained under the Resource Management Act to build cell towers and other "commercial and marketing factors" had to be worked through to determine the launch date.

"Some time ago we believed that it would be possible to launch this year, but in light of the Resource Management Act time frames it is now unlikely to be before January 2003."

Even that timing could be extremely optimistic for Econet, which has yet to lodge any applications under the act and expects the process of obtaining consents to take up to 18 months.

"There's no reason any site should take more than 18 months maximum to acquire, but we're planning to move through it much more quickly than that," said Edwards.

He said Econet had employed external Resource Management Act consultants, but he would not name them.

A document on Econet's Zimbabwe website (the company is listed on the Zimbabwe Stock Exchange) says it expects to "secure debt financing on favourable terms and has completed a network roll-out plan that will see 400,000 subscribers by 2003" in New Zealand.

Edwards said Econet still planned to build a network of 355 cell sites nationally.

Company documents say Econet has spent $27.5 million buying spectrum, but just how that figure was arrived at is unclear.

A more realistic launch date for Econet's GSM network could be early 2004.

That has raised questions among analysts, who point out that mobile phone penetration is already above 60 per cent.

Vodafone and Telecom have about 2.5 million subscribers between them. Most of their customers are in the pre-paid phone market, which Econet will probably target.

Econet plans to take advantage of provisions in the Telecommunications Act allowing it to use the equipment and networks of its competitors, but negotiations with potential partners have not advanced very far.

Vodafone spokesman Raphael Hilbron said negotiations were continuing but no agreement had been reached for roaming or cell site co-location.

Telecom spokeswoman Linda Sanders also said no agreements had been reached.

National power grid operator Transpower said it had had discussions with Econet, but telecoms infrastructure company BCL has not been contacted.

Econet is believed to be in discussions with TelstraClear, which could potentially provide a "backhaul" network. .

Chairman Bill Osbourne said the company held a board meeting about two weeks ago and "everything was on target".

"We've got to keep these things under the hat. It's going well, I can promise you that."

Part of the joint venture with Hautaki involved Econet paying the trust at least $36,000 a year for tertiary academic scholarships and $24,000 a year for tertiary sports scholarships. Osborne said those payments were being made.

One analyst, who did not want to be named, said there was potential for a niche player in the market because Econet could buy GSM equipment cheaply abroad.