Small fry opens up mobile phone market

By CHRIS BARTON

Fledgling telecommunication company Econet Wireless has revealed plans for a mobile phone network to compete with Vodafone and Telecom.

Econet director Tex Edwards said the project had been kept under wraps because it was awaiting a Government decision on regulating competition in the mobile market.

"We are a small niche player. The two incumbents are large organisations and we don't have a 15-person Government-relations team."

Econet Wireless New Zealand is owned by Econet Wireless International - a London-based holding company for Zimbabwe-listed Econet Holdings, of which Mr Edwards is a founding shareholder. The company also has telecommunications operations in South Africa, Nigeria, Botswana, Lesotho and Morocco.

In NZ it plans to start building a network in about three months using the GSM (Global System for Mobile Communications) standard - the same technology used by Vodafone. It expects to be operational in major cities by "mid-to-late next year".

The network will use frequencies Econet acquired from Northelia in February. Northelia was a mystery bidder in the Government's radio spectrum auction, paying $10.2 million for frequencies.

So far, Econet Wireless has spent $25 million in NZ acquiring frequencies and licences, organising subcontractors, and developing business plans. It has also signed a memorandum of agreement giving Hautaki Trust the right to buy up to 30 per cent of Econet Wireless NZ.

Hautaki is a pan-Maori group headed by Bill Osborne which has been granted $5 million by the Government. It has also reserved, at a 5 per cent discount, a $15 million chunk of third-generation spectrum.

Mr Edwards would not say how much the new mobile network would cost but telecommunications analysts suggest between $200 million and $300 million. The rollout will be assisted by new regulations in the Telecommunications Bill, which will allow Econet to use Vodafone's network in areas where it does not have coverage and to place transmission equipment on Vodafone's and Telecom's cellsite towers.

The new regulations, although recommended by the Hugh Fletcher telecommunications inquiry, were dropped from the draft bill. But late submissions heard in private by the bill's select committee resulted in a Government u-turn.

Asked if there was any truth to rumours that Econet had to lobby to Maori MPs and the Prime Minister to force the change of heart, Mr Edwards said: "We did stomach crunches, sit-ups and star jumps. We bashed away at it."

Econet has yet to meet Vodafone to work out commercial terms for sharing its resources. If disputes arise during those negotiations, the new bill allows for resolution through an appeals process to the Telecommunications Commissioner.

Mr Edwards, an expatriate New Zealander, graduate from Auckland University and banker by profession, has been abroad for 12 years . He has worked in London, New York and Johannesburg as a telecommunications and media finance analyst and made several investments in "frontier" mobile markets.

He said the investment opportunity here was sparked by the low prices paid for radio spectrum, but frustrated by the time it took to complete the auction and the long-winded introduction of the bill.