Cellphone deal adds a third choice

Rio Zhang (left), managing director of Huawei Technologies, Huataki Trust chairman Bill Osborne and Econet NZ executive director Tex Edwards at Auckland University marae yesterday. Picture / Paul Estcourt

A third choice for mobile phone users may soon be on the way, with Econet Wireless New Zealand signing an agreement with Chinese equipment supplier Huawei Technologies to pilot a W-CDMA network in Auckland.

The third-generation spectrum for the network comes from the Hautaki Trust, which holds it as part of the settlement of Treaty of Waitangi claims to radio spectrum.

The pilot - announced yesterday at the annual meeting of Hautaki's parent body, Te Huarahi Tika Trust - will involve 10 sites and a switch in central Auckland, with installation and testing due to be completed by April.

Econet has registered the telephone number prefix 0281 to its system.

The initial agreement covers up to 410 sites in four cities, indicating the venture will need a roaming agreement with an existing carrier - Telecom or Vodafone - to guarantee national cover.

It is understood the total cost will be around $120 million.

Econet New Zealand executive director Tex Edwards said funding arrangements were confidential.

However, Edwards said Econet did not have to maintain older telephone networks as its rivals did, so its cost structure could be lower. Also, Huawei is aggressively undercutting established infrastructure providers like Ericsson, Nokia and Nortel.

Econet has mobile networks in Zimbabwe, Botswana, Lesotho and Nigeria. It formed a joint venture with Hautaki almost four years ago, but its credibility here took a hammering as little progress was seen.

Hautaki chairman Bill Osborne said potential investors were hard to find due to the turmoil in the international telecommunications sector in the early years of the joint venture.

"The 2.5G opportunity went away and we had to come up with a new business plan," Osborne said.

"The regulatory environment in New Zealand was also not conducive to new entrants. There is now a far grater awareness of the issues in the telecommunications sector here. That opens up opportunities and people are more likely to enter into discussions."

While the main regulatory issues - number portability, co-hosting of equipment on other operators' sites and national roaming - are still unresolved, the outlook is better than it was even a year ago.

Telecommunications Users Association director Ernie Newman welcomed the Econet plan.

"In context of the setback of TelstraClear not going into mobile, it is a lifeline for the New Zealand consumer," Newman said.

"The challenge now for the regulator and the Government is to get the building blocks in place so this can have a chance of succeeding.

"There needs to be enough clarity so Econet and others can have the certainty to make a business case and get the kind of support which is normal in other countries."

Econet founder Strive Masiyiwa did not get to the meeting.

Last month, Econet said it intended to list on the London Stock Exchange. It hopes to raise US$400-US$500 million ($566.5-$708 million).


Getting mobile
* 10-site pilot expected by April, roll out of network to four cities starting late 2006.
* Will use W-CDMA technology from Chinese firm Huawei.
* Econet NZ is 30 per cent owned by Maori spectrum trust Hautaki, rest by Zimbabwe-based parent.
* Regulatory change still needed for venture to succeed.