Chinese bank releases $65m for NetOne expansion
Money & Markets

Chinese bank releases $65m for NetOne expansion

THE Exim Bank of China has released $65 million for NetOne’s network expansion.
The money, which is 30 percent deposit of the total credit facility, was released to Huawei International of China, a company contracted to undertake the network expansion, NetOne managing director Reward Kangai said in an interview last week.

“It’s a down payment that will enable our contractor to start manufacturing the telecommunications equipment including towers and base stations,” said Kangai.

“We’re not receiving money but it’s paid directly to the contractors as and when it’s needed.”

This will see NetOne, with 3,3 million subscribers, expanding its network capacity to accommodate more users and improve voice quality and data speeds going up to 4G technology.

The government signed a concessional loan agreement with China Exim Bank worth $218,9 million for NetOne’s network expansion under the company’s Phase II Project.

The loan agreement carries an interest rate of two percent per annum and is payable over a period of 20 years. NetOne has opened an escrow account where it will deposit repayments.

“The expansion will see us accommodating an additional four million users and to provide internet services at high speeds,” said Kangai.

Last year, the company spent about $20 million on capital expenditure which included setting up 50 base stations. NetOne contracted Nokia and Huawei to undertake the project.

“Upon the completion of these two projects, NetOne will have capacity to accommodate 12 million users,” he said.

Econet Wireless, the largest mobile phone company, has nine million subscribers.

The expansion of NetOne is among several infrastructure projects being funded by the Chinese.

Telecommunications fall under the infrastructure and utilities cluster, one of the four clusters of Zim-Asset, the country’s economic blueprint.

The government has already contracted Sino-Hydro to expand capacity at Hwange Power Station at a cost of $1,5 billion.

The project will add 600 megawatts onto the grid. The same company was also contracted to add two units at Kariba Hydro Power Station.

Some of the projects being financed and implemented by Chinese companies include the $150 million expansion of Victoria Falls airport and the rehabilitation of Harare Morton Jeffrey water plant at a cost of $144 million.

In addition, the government is in negotiations with China Africa Sunlight Energy Company to secure a facility of $53 million to augment funding for construction of the Gwayi-Shangani Dam in Matabeleland.

An MoU was signed between the Zimbabwe National Water Authority and CASECO, paving way for disbursement of the funds.

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