A Double-Edged Sword for Econet and Africa’s Telecom Landscape” – The Zimbabwe Mail

The arrival of Starlink in Zimbabwe marks a pivotal moment for the country’s telecommunications industry, and its implications could ripple through the local telecom landscape, particularly in the mobile network operator (MNO) and internet service provision markets.

By Brighton Musonza

The potential disruption to Econet, Zimbabwe’s leading telecom provider, brings a host of economic, social, and infrastructural challenges. If Starlink, with its satellite-based services, undermines Econet’s viability, the consequences could be profound, reshaping the balance of power within the country’s telecommunications sector and influencing the broader African market. Econet, like many African telecom operators, faces a unique set of challenges.

Already burdened by sanctions imposed on Zimbabwe’s leadership, which raise the country’s systematic risk premium, Econet Zimbabwe’s access to international capital markets has been severely constrained. The company’s credit rating with international agencies is significantly lower than that of its peers, making it more expensive and difficult for Econet Zimbabwe to secure affordable financing. This situation forces the company to turn to sub-prime lenders, which charge higher punitive interest rates, further increasing operational costs passed on to the consumers. Additionally, Econet has had to rely on lower-cost equipment from Chinese telecom suppliers, which can lead to occasional service disruptions and poor services. These financial struggles have already placed the company on the defensive, and the arrival of Starlink could further erode Econet’s market share, making its financial health even more precarious.

Moreover, Econet Zimbabwe is burdened with legacy debts owed by state-owned telecom operators like NetOne and Telecel. These unpaid debts, running into millions of dollars, further strain Econet Zimbabwe’s cash flow and ability to invest in necessary infrastructure upgrades. If Starlink siphons off a significant portion of Econet Zimbabwe’s revenue by providing faster, more reliable internet services, the company’s credit rating could be further downgraded, making it nearly impossible for Econet Zimbabwe to maintain its existing infrastructure, let alone expand it. The fallout from such financial instability would not be limited to Econet alone but could destabilize Zimbabwe’s broader telecommunications ecosystem.

Econet Zimbabwe is more than just a telecom provider; it is deeply integrated into Zimbabwe’s economy and society. As one of the leading taxpayers in the country, Econet contributes significantly to the government’s fiscal revenue. Its impact extends across sectors, particularly in finance and mobile banking. Econet’s EcoCash service has revolutionized financial access for millions of Zimbabweans, particularly those in rural areas who have little to no access to traditional banking services. A destabilised Econet would, therefore, not only affect telecommunications but also disrupt key services that the Zimbabwean economy relies on for daily operations, including mobile banking, which plays a crucial role in e-commerce, small business operations, and informal trade.

From a regional perspective, Econet’s importance is even more pronounced. As one of the leading MNOs in Southern Africa, Econet has been instrumental in advancing telecommunications infrastructure in a region where many countries still lag in digital connectivity. A weakened Econet could lead to a domino effect, reducing regional competitiveness in the face of foreign telecom giants like Starlink. Furthermore, Econet’s integration into the African mobile financial ecosystem, with platforms like EcoCash, positions it as a leader in financial inclusion across the continent. The potential for Starlink to disrupt this position could reverberate beyond Zimbabwe, affecting neighbouring countries that rely on Econet’s expertise and infrastructure for regional connectivity.

While the arrival of Starlink introduces new competitive pressures, it also offers undeniable advantages for Zimbabwe’s economy. Starlink’s satellite-based internet services could significantly boost digitalization efforts across the country, particularly in rural and underserved areas. For years, rural communities in Zimbabwe have struggled with limited or unreliable internet access, hindering development and economic participation. Starlink’s low-latency, high-speed internet could bridge this digital divide, enabling rural communities to participate more fully in the digital economy. This would have a positive impact on industries such as e-commerce, where businesses could expand their reach to previously inaccessible markets.

Starlink’s presence could also be a game-changer for Zimbabwe’s creative and entertainment industries, which have been hampered by slow internet speeds and poor connectivity. With faster and more reliable internet, creatives can explore opportunities in digital media, streaming, and content creation, contributing to the growth of Zimbabwe’s burgeoning entertainment sector. Similarly, education could benefit immensely from Starlink’s services, as schools in remote areas gain access to online learning resources, potentially revolutionizing the country’s education system.

However, these benefits come with risks. By allowing a foreign company like Starlink to dominate its telecommunications landscape, Zimbabwe could become overly reliant on an external provider for its digital infrastructure. This dependence could lead to reduced national control over critical data and communication networks, raising concerns about data sovereignty and security. Starlink operates outside the regulatory framework of Zimbabwe, meaning that its influence on national telecommunications policies and practices would be limited. This lack of oversight could potentially compromise Zimbabwe’s ability to safeguard its digital infrastructure from foreign interference.

The implications of Starlink’s entry into Zimbabwe extend beyond national borders. Across Africa, MNOs have been grappling with the challenge of providing reliable and affordable internet access in the face of rising competition from external players like Starlink. In the regional context, Econet’s decline could signal a broader shift in Africa’s telecom market, where foreign entities gain more influence over local telecom services. This would undermine regional efforts to promote local ownership and control of critical infrastructure, a key element of the African Union’s digital strategy.

Moreover, if Starlink succeeds in Zimbabwe, it could set a precedent for other African nations, particularly those with struggling telecom sectors. Many African countries are still in the process of building out their digital infrastructure, and the arrival of satellite-based internet could offer a quick fix for connectivity issues. However, the long-term consequences of this shift could weaken the continent’s telecom incumbents, many of whom are already struggling with high costs, regulatory pressures, and political instability. The result could be an African telecom landscape increasingly dominated by foreign entities, with local MNOs losing their competitive edge and regional integration efforts stalling.

The arrival of Starlink in Zimbabwe represents a double-edged sword for the country’s telecommunications sector. While it offers undeniable advantages in terms of connectivity, digital inclusion, and economic growth, the potential disruption to Econet could have far-reaching consequences. Given Econet’s central role in Zimbabwe’s economy, from mobile banking to e-commerce, weakening the company would destabilize not just the telecom sector but the broader economy as well. Furthermore, the regional and continental implications of this shift could reshape Africa’s telecom landscape, with local MNOs facing increasing competition from foreign entities like Starlink.

As Zimbabwe and other African nations navigate this new era of telecommunications, it is essential that policymakers strike a balance between welcoming technological innovation and protecting the viability of local telecom incumbents. Failure to do so could result in a telecom landscape where foreign dominance undermines national and regional control over critical infrastructure, threatening long-term economic stability.

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