MTNL may Buy 51% in Zimbabwe’s TelOne

Investment to be routed via telco's Mauritius arm; move is MTNL's second attempt to enter Africa

    State-run MTNL is eyeing a 51% stake in Zimbabwe's state-owned landline operator, TelOne, for an undisclosed sum, an executive directly aware of the development told ET. The funds will be routed through its Mauritius arm, Mahanagar Telephone Mauritius (MTML). 
"The Zimbabwe government is keen to offload a 51% stake in TelOne, which is the country's sole state-owned landline operator. Since TelOne also has a GSM mobile permit, it fits well with our plans to enter the African cellular turf in the near future," a senior MTNL executive privy to the talks told ET. 
TelOne was recently granted a GSM mobile permit and will be the fourth mobile operator in a market of some four million subscribers. Saddled with sizeable debt, TelOne is scouting for a strong overseas partner to enter the mobile turf. This will be MTNL's second attempt to enter Africa — in 2006, the telco failed to bag a mobile licence in Kenya and a year later it lost out in its attempts to buy a controlling stake in Telkom Kenya. 
Sanjay Garg, who heads MTNL's Mauritius subsidiary, confirmed the discussions with the Zimbabwe government but said any potential deal with the state-owned telco would only happen after MTNL's soon-to-belaunched GSM operation in Mauritius gains traction by the year-end. 
MTNL is slated to spend about $20 million for its 200,000-line GSM launch. MTNL-Mauritius is working closely with the Information and Communication Technology Authority (ICTA) — the apex telecom regulator in Mauritius — to hasten its Africa plans. Its Zimbabwe venture is learnt to have the blessings of ICTA chairman Trilok Dwarka, who is also closely involved in telecom regulatory matters for the 19-member Common Market for Eastern & Southern Africa (COMESA) — the largest free trade block in Africa. 
Mauritius and Zimbabwe are COMESA members. At present, MTNL runs a mix of CDMA mobile, landline, long distance operations and internet services in Madagascar. With more than one lakh mobile subscribers, the CDMA wireless services business is MTNL's mainstay in Mauritius. 
But since a majority of the tourists traveling to the island are on GSM, the company has, over the years, lost out heavily on the international roaming revenue front to GSM rivals like Orange and Emtel. Accordingly, MTNL now plans to launch GSM services in Mauritius by September.