Glimmer of hope for Maori 3G

By PETER GRIFFIN

Nigeria may seem an unlikely benefactor for a Maori telecommunications venture, but events in the oil-sodden West African republic may stir some life into the moribund operations of Econet New Zealand, part owned by Maori Spectrum Trust.

Cash starved and with its plans to become New Zealand's third mobile network operator shelved for now, Econet NZ has sat on the sidelines as Vodafone and Telecom continue to battle each other in the mobile market.

But Econet's parent, Nigerian mobile phone operator Econet Nigeria, appears to have overcome an obstacle that threatened the future of the whole group.

A 5 per cent owner of Econet Nigeria, a company operating in the most promising mobile market in Africa, Econet Wireless International believed it had pre-emptive rights to take a controlling stake in the Nigeria operation.

But Vodacom, 30 per cent owned by Vodafone, also claimed to have rights to take a controlling stake. It also entered a management deal with Econet Nigeria and rebranded the business as Vee Networks.

Legal action by Econet to prevent Vodacom from buying more of the company threatened to drag on for years and stymie investments in offshoots such as Econet NZ.

But Vodacom has now pulled out of its management contract, claiming a "breach of trust" on behalf of its Nigerian partners.

It's now unlikely Vodacom will seek a controlling stake in Vee.

The head of Econet New Zealand, Tex Edwards, said Vodacom's pull-out was "an interesting development in a crown jewel asset for us".

The move is likely to boost the chances of a separate joint-venture deal being nailed down between Econet and South African Altech, which could generate US$70 million ($113 million) in cash for Econet.

Edwards has hinted that money may be coming the way of Econet New Zealand if the Altech deal is finalised.

Edwards still is not making any comment on plans for the New Zealand operation, which gained access to third generation (3G) mobile spectrum through a partnership with the Maori Spectrum Trust. The trust's commercial arm Hautaki spent $4 million buying a 30 per cent stake in Econet. But Econet has continued to burn cash and has made no move to build a network.

Edwards said the recent impressive result from Vodafone New Zealand showed there was room for more competition here.

"It proves there's a problem in New Zealand's cellular market. New Zealand remains the only GSM economy with one GSM network."

Key to the success of a new entrant into an already highly developed mobile market is number portability - the ability to take your phone number with you as you change network provider. The country's telcos are still haggling about how to do this.

Econet appears to be hamstrung until events in Africa play out. Edwards said the intention was still to launch a network here.

"We've got this beautiful asset and we're preserving it. We're not giving up and going home."

The story so far

Maori Spectrum Trust got $5 million from the Government in 2000, along with a 10-year right to buy 3G telecommunications spectrum at a 5 per cent discount.

The move was seen as a way to boost Maori participation in the knowledge economy.

In 2002 the trust invested $4 million of the money in Econet Wireless, the fledgling New Zealand subsidiary of South Africa-based Econet Wireless Group.

The trust also gave Econet a 10-year option to use the 3G spectrum set aside for Maori.

Econet has yet to make any progress in creating a wireless network.

In the year to June 30, 2003, Econet Wireless New Zealand declared a group after-tax loss of $2.8 million on no revenue.