Consumer frustration mounts

LIVINGSTONE MARUFU / CLOUDINE MATOLA

Zimbabwe’s telecommunications sector is facing mounting public anger, rising regulatory scrutiny and structural upheaval, as consumers register growing frustration over deteriorating service quality, rising complaints and persistent network inefficiencies.

The disquiet comes at a critical moment for the industry, just as government plans to consolidate State-owned operators into a single telecoms powerhouse, and market leader Econet Wireless Zimbabwe prepares a dramatic exit from the Zimbabwe Stock Exchange (ZSE).

The Consumer Council of Zimbabwe (CCZ) says complaints are rising sharply, with poor service experience emerging as the primary driver of dissatisfaction.

CCZ chief executive Rosemary Mpofu told Business Times this week that the council is receiving increasing reports of poor network coverage, data frustrations and inadequate customer response mechanisms.

“We have been actively engaging with consumers and monitoring their complaints regarding various service providers, including mobile network operators. Based on our records and consumer feedback, here are some common complaints we have received including poor network coverage and quality.

“Many consumers have complained about the poor state of network coverage, particularly in rural areas, leading to dropped calls, poor internet connectivity, and difficulty accessing mobile services.

“Consumers have complained about receiving unsolicited messages and calls from mobile network operators, often with promotional content or SIM card registration requests.

“Consumers have reported issues with data bundle expiry, where unused data is lost, and difficulties with data rollover, where excess data is not carried over to the next period, however the data roll over issue was addressed by POTRAZ in 2019 through their regulatory circular 02 of 2019.

“Some consumers have expressed dissatisfaction with the response times and resolution of their complaints by mobile network operators.”

Beyond service quality, pricing dynamics are also fuelling tension. Mpofu said consumers are facing difficulties purchasing data and voice bundles using Zimbabwe Gold (ZWG), with operators showing preference for US dollar transactions.

Off-peak data bundles, marketed as cost-saving options, have also drawn criticism for being practically unusable.

Mpofu confirmed that engagements with operators are ongoing.

“We have engaged with mobile network operators regarding the issue of off-peak bundles being unusable. The operators have acknowledged the concerns and made some adjustments. For example, some have revised the validity period of off-peak bundles with more flexible usage options and periods. However, we continue to monitor the situation and push for further improvements.

Our engagements with the mobile network operators have led to some positive changes, but there is still more work to be done to ensure that consumers’ concerns are fully addressed. We will continue to advocate for consumers’ rights and push for improvements in the telecoms sector,” Mpofu said.

The consumer backlash coincides with significant structural shifts in Zimbabwe’s telecoms landscape.

As was reported by Business Times last week, Mutapa Investment Fund (MIF), the country’s sovereign wealth fund, is planning the creation of a telecoms behemoth through the consolidation of state-linked operators — NetOne, TelOne, Powertel and Telecel — into a single entity.

The objective is to unlock economies of scale, rationalise capital expenditure and position the sector to withstand intensifying competition from global satellite operators such as Elon Musk’s Starlink.

Mutapa’s Chief Investment Officer, Simba Chinyemba, has framed industry fragmentation as an existential risk in an era increasingly defined by satellite-driven connectivity.

The consolidation push signals government recognition that Zimbabwe’s digital infrastructure must evolve rapidly or risk irrelevance in a global market reshaped by low-earth orbit satellite networks.

At the same time, Econet Wireless Zimbabwe, the country’s dominant telecoms operator, is executing one of the most consequential corporate restructurings in recent capital markets history.

Econet has announced plans to delist from the ZSE and migrate to the Victoria Falls Stock Exchange (VFEX) Over-The-Counter (OTC) platform, alongside the listing of its infrastructure arm, Econet InfraCo.

The move follows Econet’s sustained criticism of limited price discovery on the ZSE.

Minority shareholders are being offered what the company describes as an enhanced value proposition rather than a forced exit.

Unlike conventional delistings, Econet is guaranteeing minorities an exit at three times the prevailing share price at the time the transaction was first announced on 4 December 2025. The migration introduces a minimum reference price of US$0.50 per share, roughly triple the starting market value, offering rare downside protection in Zimbabwe’s volatile markets.

The offer comprises US$0.17 in cash and US$0.33 in Econet InfraCo shares.

Research firm Morgan & Co assessed the fairness of the transaction using multiple valuation approaches.

“To this effect, we valued Econet Wireless based on a combination of relative and objective valuation models. In particular, we incorporated the relative PER and EV/EBITDA valuations which were complemented by a DCF valuation.

Fair multiples in the relative valuation models were based on regional and global peers, and a subjective country risk discount was applied to reflect Zimbabwe’s relatively high sovereign risk.

The result is a fair price of US$0.65 per share before any company-specific risk discounts, and this is almost twice the current market price and slightly higher than the offer price of US$0.50 per share.

That said, one should not feel like Econet Wireless is ripping its shareholders because this is only but an opinion. Instead, the key takeaway from this should be that Econet Wireless has been quite sincere about their concerns regarding a lack of price discovery, and they have certainly backed it with an offer price that is backed by fundamentals.

The offer also goes above and beyond the requirements of the listing rules with regards to an offer to minorities.

Now for the tricky part, the mechanics of the offer price.

The price of US$0.50 seems fair and we have no qualms about it. However, the offer comprises a cash pay-out of US$0.17 and a share of Econet InfraCo worth US$0.33 for each Econet Wireless share held. Let’s pause here and take a detour into this new vehicle.”

Morgan & Co’s valuation of Econet InfraCo, based on listed global TowerCos such as Helios Towers, American Tower Corporation, SBA Communications and Indus Towers, produced a more conservative estimate.

“Now back to the main plot. We also performed a valuation on Econet InfraCo using only relative valuation (PER and EV/EBITDA) models given limited financial information.

Fair multiples were based on the subset of listed TowerCos mentioned above. These multiples were adjusted by a subjective country risk discount to result in a fair forward PER multiple of 19x and a forward-looking EBITDA multiple of 10x.

Our choice of peers was based on the fact that there are no companies in Zimbabwe that are listed and operate as TowerCos.

This exercise suggests a fair value estimate of US$0.22 per Econet InfraCo share.

This, in comparison, is materially lower than the valuation of US$0.33 per share.

Combining our fair price estimate for Econet InfraCo and the cash offer component gives an effective offer price of US$0.37 per share which is a notch lower than US$0.50 per share.”

Another research house, FBC Securities (Private) Limited, has encouraged shareholders to accept the offer, arguing that it balances liquidity with long-term infrastructure exposure.

“Accept the Exit Offer: Realise liquidity at market-validated cash prices (US$0.17/share) while retaining exposure to Econet InfraCo to capture long-term infrastructure value, which is highly likely to be positive and sustainable. While the future prospects of Econet InfraCo remain uncertain, an investor may choose to exit the investment shortly after listing. Even assuming a post-listing share price adjustment of -15%, the total effective exit proceeds would still remain attractive, with the combined cash and scrip consideration declining modestly to approximately US$0.45 per share (US$0.17 cash plus US$0.28 VFEX value), thereby preserving a substantial portion of the premium relative to historical trading levels.”

However, FBC also issued a warning.

“A complete refusal of the Exit Offer concentrates exposure in an unlisted, less liquid operating company, increasing governance and liquidity risk.”

The firm further advised investors to conduct thorough due diligence.

“Prospective investors should engage in due diligence focused on tenancy concentration, cash-flow sustainability, dividend policy, and governance structures, while being cognizant of potential early trading discounts and liquidity limitations inherent to a listing by introduction. Investment allocation should be calibrated to risk appetite and long-term horizon, recognising that initial market pricing may adjust as liquidity and investor confidence evolve.”

FBC added that Econet InfraCo presents a long-duration infrastructure investment case built on hard-asset collateralisation and US dollar-linked revenues.