Econet Wireless International’s Expansion Across Africa

In line with Chijioke (2007) As an organization mainly considered as an African Private Sector, Econet is a telecommunication industry offering wireless technology services and products concerning the key areas relating to the mobile and fixed telephony industry, internet data transfer and satellite communication in nine different countries globally.

The group has its headquarters in South Africa. The other operational offices are in Botswana, Burundi, Kenya, Lesotho, Nigeria, Zimbabwe New Zealand and United Kingdom. The systems in various countries are fully stand-alones with management of individual broadband at the local scenes of each country. The parent of the Econet is Essar Communication Holdings with 49% sares.

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In Africa, the most dominant business and economic characteristics of mobile telephony are mainly internet services, data streaming or exchange services, transaction systems and sale of mobile handsets. Other services include the old system of landline telephony services.

Entry into the mobile telephony business is not an easy one as there are many barriers encountered by investors. These barriers could be government policies barriers such as monopoly over telecommunication services or long procedures involved in acquiring license to operate from most of the African governments. The financial barriers also hinder prospective investors from entering new markets and compete with already established companies in these markets niche.

Another major barrier to the entry into the market is opinionated interference by the political elite in the host government so as to safeguard their interest in the industry i.e. some prominent government official are shareholder in some telecommunication companies and so they will never welcome new players in the market with open hands.

Their wish is for monopolization to enjoy better profit margins for their investments. One cannot put aside the poor telecommunication infrastructure backbone in most African countries among the barriers, as this would mean telecommunication companies would need to put various resources in order to have proper network coverage.

Earlier on, strategic group map of telephony market in Africa was poor and no companies had invested in communication as these industries faced monopoly. Later on, with the modernization of telecommunication facilities and new technologies such as the recent implementation of the fibre optic cable to link Africa to Middle East, more players have shown interest in this sector.

This has attracted more companies into the market making services and goods competitive, affordable, reliant and fast. It can now be said that, strategic group map of telephony in Africa is growing rapidly and becoming populated with communication services that are more mobile oriented coming in through the various service providers.

According to my personal opinion, the strategic groups, which are enjoying favourable positions, are those that took an early advantage of the emerging market in Africa and as a result, these companies have cut themselves a good share of the market in most counties. Also strategic groups that went it consortium with potential like mind companies have positioned themselves favourably.

Among the resource strengths that Econet has, is its offers of full telecommunication services and it never limits itself to telephony package, competitive prices for their range of products and services. Due to this, Econet was able to become second largest mobile operator in Nigeria in 2001.

The ability of Econet to venture into new markets either in partnership or not like in Botswana, Lesotho, Nigeria, Kenya and many more are some of its key strong business points. The weakness of Econet among other competitors include over dependent on already self established markets as it had earlier done when it was over depending on Zimbabwe market, where it commanded the huge market.

Lack of funds has been a weakness to Econet as it has left out a lot of opportunities due to lack of initial capital for instance, Econet was unable to increase it shares when it had a 5% holdings to 33% in the consortium of 21 partners due to lack of funds. This also makes the Econet network coverage and services poor due to lack of superior and quality network equipments.

Single branding, to my opinion is another weakness, as any failure in any market will tend depict the will fail again in a new market.

The most promising markets for Econet is probably in the countries with big populations and lesser mobile service providers and definitely, this needs accompaniment of proper marketing strategies. Threats on the future well being of Econet include lack of funds to cater for it future undertakings or expansion programs and failure to acknowledge that mergers in some markets is crucial.

Major wireless mobile service provider’s have an upper hand in Africa market than Econet but from the case of Econet in Nigeria where it able to become the second largest mobile service provider despite losing the opportunities of leading in the market, definitely Econet’s strengths still look favourable compared to its key rivals.

By entering into partnership with other companies, Econet has been able to add up their stakes in those companies hence take up controlling stakes through its internationalization. Econet’s alliances seem to offer future advantages in the country markets, where they competes by giving Econet a leverage to be able to compete with major competitors.

For example, when Econet had to enter into an alliance with Vodacom to access the Vodacom’s resources and thus increase its network coverage, which was their weakness, at that point. Through such a strategy, Econet was able to serve the growing population. Botswana, Lesotho, Zimbabwe, Malawi, New Zealand and Nigeria are some of the country markets where Econet has strategic alliances has had accomplished success.

To compete best in Africa’s emerging markets for mobile telephony services, Econet should first continue to offer a wide range of products and services as they have always done, this would enhance its popularity. The company will equally gain more in monetary terms from these range of service and products.

Secondly, their products and service should be affordable and always available in the market. Econet should also invest in improving their network coverage in country markets, so that subscribers do not have to face inconvenienced or jammed unclear network converges. Econet has to embark on marketing of their products and sensitizing even the mobile users in the grassroots levels on reasons why they should be using their products and services.

In the countries where Econet is a competing firm, the recommendation would entail to have the top management team embarking on a massive market campaign, provision of quality services and always availing of services and products to consumers at most affordable rates possible.

Another recommendation would be that the company should pursue international expansion with a multi-branding strategy, investing more the profits like stock exchange, to find funds future expansion endeavours and upgrading of current communication infrastructure for better service provision.

Being a full communication service provider was the initial aim and strength of Econet, which has seen it come this far despite all challenges involved on the mobile telephony industry and therefore the company should continue offering complete communication packages.

By investing in stock market and other profitable projects, Econet can generate more profit, which will be crucial for financing its growth and expansion. It is equally important to keep financial partners into consideration as well, for assistance in case of shortage of funds.

References

Chijioke, E. (2007, January 26). Recent Socio-economic Developments in Nigeria.

Retrieved January 13, 2010, from http://ezinearticles.com/?Recent-Socio-economic-Developments-in-Nigeria&id=432174

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