Limpopo Lte Business Case Online Draft

7/28/2019 Limpopo Lte Business Case Online Draft

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Customer: INTER SYSTEMS IT EXEProject Name: LIMPOPO LTE PROJECTDocument Number: SYS032012BCVersion Number: 2.0

INTER SYSTEMS IT

INTER SYSTEMS IT UK Limited, 2011 Issue Date: 01/11/11 Page 1 of 46Classification: Status: Draft Author: Project Director

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INTER SYSTEMS IT

LIMPOPO LTE PROJECT: BUSINESS CASE

PurposeThis document provides the base information regarding the project business case, covering thefundamental questions of:

o Reasons for the Projecto Expected Benefitso Risk Analysiso Costo Time Scaleso Investment Appraisal

This document should be read by all members of the project in order to ensure a commonunderstanding.

Copyright 2007 INTER SYSTEMS IT. This material, including documentation and any related computerprograms, is protected by copyright controlled by INTER SYSTEMS IT. All rights are reserved. Copying,including reproducing, storing, adapting or translating, any or all of this material requires the priorwritten consent of INTER SYSTEMS IT. This material also contains confidential information, which maynot be disclosed to others without the prior written consent of INTER SYSTEMS IT.Copyright 2007 INTER SYSTEMS IT. All rights reserved.

INTER SYSTEMS ITSt John's House

54 St John's SquareLondon

EC1V 4JLUnited Kingdom

Project Name LIMPOPO

Document Number SYS032012BC

Version Number 3.1


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Document Control

Document ApprovalApproved By Organisation Role Date

Tim Sameke INTER SYSTEMS IT MD 16/11/11

SteeringCommittee

LIMPOPO LTE PROJECT EXE

Document HistoryAuthor Version

NoStatus Reason for Change Issue Date

AWNIT KUMAR 1.0 Draft New document 01/11/11

AWNIT KUMAR 1.1 Draft Document Review 29/10/12



DistributionName Organisation Email Address

Steering Committee LIMPOPO LTEPROJECT

[email protected]

INTER SYSTEMS IT INTER SYSTEMS IT [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Table of ContentsDocument Control ........................................................................................................................ 2

Document Approval ................................................................................................................................................ 2

Document History ................................................................................................................................................... 2Distribution .............................................................................................................................................................. 2

Table of Contents.................................................................................................................................................... 3

Executive Summary ............................................................................................................................................. 4

About Us ................................................................................................................................................................. 4

Project Background ............................................................................................................................................. 5

Market Research ................................................................................................................................................... 6

Demographics/ Service Penetration ................................................................................................................ 6

Products................................................................................................................................................................ 16

Financial Analysis .............................................................................................................................................. 25Options Analysis................................................................................................................................................. 28

Expected Benefits............................................................................................................................................... 28

Risks Analysis ..................................................................................................................................................... 28

Financial Cost Analysis .................................................................................................................................... 43

Project Timescales ............................................................................................................................................. 45

Investment Appraisal ......................................................................................................................................... 45


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Business Case

Executive Summary

About Us

INTER SYSTEMS IT LTD, is a Telecommunication Services company focused on the deployment and

management of high CAPEX infrastructure projects. Our Managed Services portfolio is dedicated on

delivering value, reduced CAPEX/OPEX costs for both fixed line and network operators worldwide.

INTER SYSTEMS IT has tailored solutions which make it possible to carry out time critical upgrades and

deployments of Core Network and Radio Access Network projects. We are an independent Managed

Services company, not aligned to any infrastructure vendors giving us a unique selling point of giving

clients cost effective network solutions. INTER SYSTEMS IT great industry edge of delivering great value

open solutions ensures best in class technology solutions for communication network roll outs.To deliver a high standard service, INTER SYSTEMS IT works with several Telecommunication Equipment

Vendors who provide a broad selection of technologies hence enabling us to meet a wide criterion of

our client needs. Our in depth knowledge and particularly the in-house expertise and experience in the

GSM/WCDMA/LTE mobile and fixed network solutions, gives us a distinct competitive advantage and

enables us to provide an exceptional level of service. Not only are we technology experts but integrated

in our business operation is a team of experienced Project Managers with extensive know-how in the

deployment of network infrastructure. Essentially INTER SYSTEMS IT Ltd understands exactly what is

required to design, build, maintain and finance modern telecommunications and IT infrastructure.

INTER SYSTEMS IT Ltd aims to provide products and services that give network operators these

fundamental benefits:

Reductions in CAPEX and or OPEX.

Increased operational efficiency: Deliver operational and financial efficiencies throughstreamlined outsourced operations.

Fixed and low costs for OPEX and CAPEX during new network roll out phase.


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Shared risk between Network operators and Managed Service provider for new technology rollout.

Faster Time-to-Market for new services requiring infrastructure upgrades.

Reduced network overlays and lower operation costs.

Predictable network quality though service level Agreements (SLA).

Focus on core business: Transform networks and processes for long-term growth by shifting theoperational focus to the end-user experience and migrating to service-centric models.

Project Background

INTER SYSTEMS IT acquired a seventy five percent shareholding in COMPANY XYZ PRIVATE LIMITED alicensed telecommunications company currently planning on rolling out voice and data services in

Zimbabwe. COMPANY XYZ PRIVATE LIMITED a subsidiary of INTER SYSTEMS IT has an IAP CLASS A license

from Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) which allows this

private limited company to build a digital telecommunications network with a capacity to:

Provide nationwide fixed voice and data telecommunications services.

Provide nationwide mobile voice and data telecommunications services.

Provide an Optical Fibre backbone with two international gateway connections to West AfricanCable Systems (WACS) via Botswana and SEACOM/ EASSy through Mozambique.

Provide nationwide telecommunications services using Long Term Evolution (LTE) 4G

technology. Provide over the top digital media services such as Video-On-Demand (VOD), IPTV, eBanking and

Hosting Solutions.

Provide affordable universal access to mobile voice and data services using 3GPP WCDMAtechnology.

Project Objective

LIMPOPO LTE PROJECT has been established by INTER SYTEMS IT Ltd UK to invest (built and operate) in

the infrastructure required to roll out nationwide wireless based services including an optical fibre

backbone in Zimbabwe. The project aims to provide new broadband services such as Triple play (VOIP,

broadband internet and IPTV) including value added services to a large consumer base currently without

access to these products. INTER SYSTEMS IT through its subsidiary COMPANY XYZ PRIVATE LIMITED also

aims to be the key supplier of wholesale internet bandwidth to internet service providers, mobile and

fixed telecommunication companies.


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Project Justification

INTER SYSTEMS IT, has made the decision to undertake the LIMPOPO LTE PROJECT because it presents a

viable opportunity to build a commercially successful wireless network. Subsequently this has a

substantially positive financial and strategic impact on the companys business plans in this region.

The LIMPOPO LTE PROJECT is immensely essential to the companys growth strategy as it will make it

possible for future penetration of Managed Services in this geographical region. The new planned

network will be promoted as the flag ship of our technical and management capability. In addition a

successfully financially viable network will not only positively contribute to INTER SYSTEMS IT UK

LIMITED balance sheet but will correspondingly highlight the companys strength in end-to-end Project

Management and delivery.

The expected project outcomes as set out in the justification of the project are:

1. The LIMPOPO LTE PROJECT is aligned to the INTER SYSTEMS IT internal business plans.

2. The LIMPOPO LTE PROJECT will contribute positively to INTER SYSTEMS IT UK LIMITED balancesheet.

3. The LIMPOPO LTE PROJECT will deliver a flagship network to show case INTER SYSTEMS ITtechnical, management consultancy and end-to-end project management capabilities.

4. The LIMPOPO LTE PROJECT will provide continued professional experience for our consultantson emerging technologies.

5. The LIMPOPO LTE PROJECT presents an opportunity for INTER SYSTEMS IT to break into the Sub-Sahara Africa telecoms market.

Market Research

Demographics/ Service Penetration

INTER SYSTEMS IT has conducted a thorough market research in all areas that would affect mostly the

LIMPOPO LTE PROJECT viability and continued implementation. The LIMPOPO LTE PROJECT is planned to

deliver a modern fixed and wireless telecommunications network in Zimbabwe, Africa.

This country located in Southern Africa and shares borders with South Africa, Botswana, Mozambique,

Namibia and Zambia. Zimbabwe is a land locked country with a total area of 390,757 sq km with 386,847

sq km land and 3,910 sq km covered with water. The country has a total estimated population of 12.5

million with 90.7% literacy. Annual inflation declined from 4.3% in January 2012 to 2.5 % in January

2013. The countrys GDP for 2013 is estimated to be $11 bn (Source: National Budget) the 2013 National

Budget projects overall GDP growth of 5% in 2013 and levels of above 06% in 2014 and 2015, mainlydriven by mining, agriculture, manufacturing, tourism and construction.


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Zimbabwes tele-density currently stands at 90.5% with a significant proportion of services provided by

three GSM mobile network operators.

Mobile Penetration: 87%

Fixed Line Penetration: 3%

Internet Penetration: 12%

Based on the most recent tele-density data it is quite clear that Zimbabwes mobile phone penetration

would reach 100% by 2013. INTER SYSTEMS IT therefore has a clear strategy and plans to concentrate its

effort in:

Providing value added mobile voice services to gain market share from the incumbent networkoperators. The qualitative data for existing services provided by the current Operators and the

Telecommunications Regulator highlights substantially poor quality of services across theindustry.

Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) the local regulator has

highlighted in its periodic publications significant issues with:

An extremely high number of call drops.

Poor call quality due to network congestion.


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The lowest voice quality codec (GSM Half Rate) being consistently used by all networkoperators.

Limited or no services for voice or data due to power supply outages.

Limited or no services for voice or data due to network failures. Slow data speeds resulting in poor user experience.

High volumes of reported billing errors.

High cost of voice and data services.

Poor Quality of Service (QOS)

Poor Customer Services.

Constant breaches of customers Service Level Agreements (SLA).All of the above will be areas where INTER SYSTEMS IT aims to compete by introducing disruptive

telecommunication technologies, professionalism and management skills that would provide good

quality, value for money services. Critical to our business case is the provision of good customer support

and service delivery which will be important to gaining market share. Our entrance to the market will

also bring much needed competition not seen in this sector and differentiate between the low cost lowquality providers and the competitively priced value added service INTER SYSTEMS IT would bring.

Fixed line and Internet services are two growth market segments where the penetration rates are still

significantly low. This raises opportunities for INTER SYSTEMS IT to provide new service products such as

video-on-demand, home broadband and fixed telephone known as triple play. Integrated with mobile

voice and data our product portfolio becomes a very attractive Quad-play converged service highly

demanded by business and the socially active online consumer groups.


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LIMPOPO PROJECT: Market Assessment

LTE Subscriber Segments

Smartphone userMainly voice + moderate data

Dongle user

Datacard userbaseSubstantial Data generation

Wireless DSL

Address DSL Customers & corporates

Target LTE Subs:

2.5M in 2015


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INTER SYSTEMS IT concludes that the telecommunication market in Zimbabwe has space for another

Network Operator to provide consumers with internet based broadband services for Smart Phones,

Tablets and DSL Modem Routers as shown above. The current trends in Zimbabwe for mobile internet

broadband has increased due to the proliferation of over the top applications/content such as gamesconsoles, online gaming, Facebook, Whatsapp, Skype, IP-PBX, VoIP solutions, SKY NEWS, BBC NEWS,

Video-on-Demand, SoundCloud and YouTube just to mention a few. None of the current wireless

networks are optimised for high data services and Rich Communication Services (RCS) hence this

provides a great business opportunity.

LTE as a significant disruptive technology is primarily designed as a packet data only system with a heavy

bias towards fast and high data centric networks. With Zimbabwe having a combination of high data

demand and none of the present networks designed for such an evolution in customer usage trends the

planned network would adequately address this requirement.

It has been identified that there will be three main devices which will load the network based on

projected customer usage.

Smart Phones (including Tablets) USB Mobile Internet Dongles

Wireless DSL modemsThe estimated total number of subscribers using the devices above will be 2.5million by 2015 delivering

huge attrition for the existing Network Operators.

Competitor Analysis

Zimbabwe has an unconventional licensing structure which constitutes of five types of licenses issued

for the provision of mobile and or fixed voice and data services. The regulator Post and

Telecommunication Regulations Authority of Zimbabwe (POTRAZ) is the sole authority responsible for

issuing the following licenses to the existing fixed/wireless network operators:1. GSM License (Circuit switched mobile voice services)2. Fixed Telecommunication License (Fixed Voice and Data Services Only)3. Internet Access Provider Class A (Data + Voice over IP)4. Internet Access Provider Class A Class B (Data only)5. Converged License

Three GSM licenses have been issued to network operators, Econet Wireless, Telecel and NetOne. Some

of these companies also have Internet Access Provider (IAP) Class A licenses to provide both

fixed/wireless VOIP data. The Internet Access Provider Class A license has been issued to twelve

companies all competing to provide internet broadband and Voice over IP services. Another Internet

Access Provider license, Class B has only been issued to one company and this allows a licensee to

provide just simply data services. In addition the is also a license for fixed voice and data services

provided to only one company that is solely owed by the Zimbabwean Government. Zimbabwestelecommunications regulator POTRAZ has stopped issuing out licenses and this will continue to be the

case for the foreseeable future. Although at the end of the first quarter of 2013 a new Converged license

was announced. The purpose of this new license was to correct a blunder in licensing structure that

caused confusing on the provision of services allowed based on technology. Therefore all Network

Operators regardless of their current licenses can upgrade to the new Converged License and offer a

wider range of telecommunication services irrespective of the technology. The technology agnostic

Converged License would allow for the setup of an ubiquitous networks in step with global trends. No


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Network Operator has been issued this license as yet due to the legal and legislative processes that need

completion. The five different licenses issued by the local Regulator are not restricted to any frequency

and spectrum is allocated on a case by case basis, usually first come first serve.

Although there are clear differences in the provision of services provide by the GSM and IAP Class Alicensees with new advances in technology these differences are blurred giving IAP Class A licensees an

advantage when using disruptive technologies such as LTE. The introduction of 3GPP Long Term

Evolution (4G LTE) for one, enables mobile voice to be transmitted over data networks such as the

Internet. Therefore data networks can now provide commercial voice services which were only available

to GSM license holders. INTER SYSTEMS IT through its local subsidiary COMPANY XYZ PRIVATE LIMITED

with the IAP Class A license is in a position to provide a competing mobile voice network among other

services. Additionally COMPANY XYZ PRIVATE LIMITED will leverage its lack of legacy GSM equipment to

invest in LTE a disruptive technology which brings greater value addition and service differentiation to

the existing telecommunication market. To quickly gain significant market share our strategy will be to

induce customer churn from the incumbent GSM mobile operators, TelOne and IAPs with particular

focus on:1. Fixed residential & commercial voice services2. Fixed residential & commercial internet broadband services3. Mobile broadband services4. Mobile voice services5. IPTV or Video on Demand services6. Data bandwidth

With clear evidence of poor service provision by existing network operators our aim would be to simply

provide a better quality of service and proactive customer support. Moreover we intend to have in place

a highly competitive pricing structure based on a long term investment payback period. This will make

our product offering exceedingly attractive to a wide customer base and also hedge our pricing strategy

from a price war.

Econet Wireless Zimbabwe Limited

This locally established company is the current market leader in provision of both mobile voice and data

telecommunication services. Although Econet Wireless Zimbabwe Limited (EWZ) was the last company

amongst the three GSM license holders to be granted permission to start operating a cellular network.

In the last 12 years the company has delivered a fairly maintained a reliable mobile network in

comparison to the other Operators. This has generated a positive consumer response due to the poor

service delivery by the other two licensees hence effectively giving EWZ a monopoly. Econet Wireless

Zimbabwe Limited is also one of the largest quoted publically listed companies in terms of market

capitalisation and the only telecommunications company listed on the Zimbabwe Stock Exchange. Their

status as the market leader in terms of subscriber share and revenue has translated into significant

profits for the company. High net profit margins of 31.2% have made Econet Wireless Zimbabwe Limitedan attractive investment target on the Zimbabwe Stock Exchange (ZSE), where the stock has been highly

traded and valued.

The company has to date invested in GSM/GPRS (2G) and WCDMA (3G) technology to provide mobile

voice and data services. Econet Wireless Zimbabwe Limited has GSM nationwide coverage of 80% and

this is mainly used for mobile voice and SMS services. Data services are provided mainly via GPRS base

stations with a few WCDMA 3G locations for high data usage. Econet Wireless Zimbabwe has 6.4 million

subscribers which constitutes 57% of market share and is the biggest telecommunications operator in


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both voice and data services. They have a strong cash flow and going forwards will continue being a

dominate player in Zimbabwes telecommunication industry.

Telecel ZimbabweThis company was the first private business to be awarded a telecommunications license by the

Regulator. Telecel Zimbabwe is jointly owned by Orascom and the Empowerment Corporation a group

of small local investors. Orascom is a subsidiary of VimpelCom, a major international

telecommunications company with interests in Europe, Africa, Asia, the Middle East and North America.

The Empowerment Corporation is a Zimbabwean consortium made up of a number of Zimbabwean

companies from varying backgrounds. The current shareholding structure of Telecel Zimbabwe is not in

accordance with Zimbabwean Telecommunication regulations where foreign owned companies are

required to have a maximum 49% equity stake. Telecel Global has 60% and the remaining 40% with the

Empowerment Corporation. The company has plans to reduce the foreign owned equity in line with

local regulation by listing on the Zimbabwean Stock Exchange. Internal but public boardroom

disagreements between the main shareholders is delaying the divesture of Orascom.After recent network upgrades the company has grown to become the second largest mobile operator

in the space of just two years. Telecel have managed to achieve this by investing wisely money

generated by the business on infrastructure and value added services. The company has 2 million

subscribers constituting 18% of market share. The internal tug of war between the two rival investors if

not resolved will continue being a barrier for the company realising its full potential therefore holding on

to its market position is not a certainty.

NetOne

This solely owned Government Company was the first to get a telecommunications license to operate

the first mobile phone network in Zimbabwe. NetOne traditionally had the advantage of providing the

best coverage due to the land and tower asserts they shared with a sister company TelOne. They fell

short spectacularly when it came to delivering quality of service due to the high numbers of failedconnections, billing errors, network congestion and poor customer support. NetOne has also in recent

years failed to get loans to upgrade its network infrastructure due to defaults on previous loans. The

company requires urgent restructuring and a professional management team to take it forward.

Government privatisation plans have not been implemented and so far only two companies (MTN South

Africa & TelKon South African) have registered interested. After completing due diligence both

companies have not made any investments in the struggling business. NetOne has currently clawed back

market share from Telecel Zimbabwe but are still the third largest telecommunications company. The

company has a 2.5 million subscriber base constituting 22% of market share, although this could change

very quickly. Technologically, NetOne will continue to lag behind the other operators and will struggle to

provide value added services. Their poor financial position and management problems will only be

resolved once the entity has been privatised, which does not look likely.

TelOne

The sister company of NetOne is also solely owned by the Government of Zimbabwe and is the only

provider of fixed line services. The company has the advantage of being the biggest provider of fixed

voice and data services including an optical fibre backbone connecting to the undersea cables via

Mozambique. In the last 12 months TelOne has started to gain market share in the fixed broadband

market with its ADSL offering which is substantially cheaper and faster that the current wireless
http://www.orascomtelecom.com/http://www.orascomtelecom.com/


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broadband solutions. The broadband service offering is notably very new hence it is still to be seen if the

quality of service is maintained as the customer base increases. Demand for fixed voice in Zimbabwe

remains very high as TelOne has failed to provide telephone connections to customers across the

country. Going forward the company has an opportunity to grow and proved much needed services tounderserved population but the company seems to suffer from the same problems as NetOne. A poor

financial position compounded by an unprofessional management team which continues to hamper the

success of TelOne unless privatised. Just like NetOne in the short term privatisation looks very unlikely

due to the low equity on offer to any potential investors, dilapidated over valued assets and the

unsustainable blotted wage bill.

Internet Service Providers: Class A

In 2010 the regulator issued a new type of license meant to stimulate growth in the internet broadband

fixed line and mobile services. In total twelve companies were issued with Internet Service Provider

Class A (IAP) licenses to provide broadband and voice over IP services. COMPANY XYZ PRIVATE LIMITED

was one of the successful companies to have been granted a ten year license. A small number of theseoperators have started providing voice over IP (VOIP) services in the major towns and cities directly

competing with TelOne. Mostly using low CAPEX technologies such as CDMA and WiMax as this small

handful of Network Operators has managed to introduce affordable fixed line service and this has

helped increase the use of broadband in the last 2 years. The service offering has been the same among

the top tier of CLASS A Internet Service Providers, issues of quality have been problematic due to lack of

network capacity and erratic availability of services. The key problem affecting all Internet Service

Provider Class A providers primarily being poor network planning, lack of technical competence on radio

frequency systems and shortage of capital. This shortage of capital from local banks has meant the

inadequate investment on infrastructure deployment. Inevitably these Internet Access Provider Class A

licensee companies will require foreign direct investment to compete with the GSM licensees providing

similar services. In the long term they are likely to be many casualties with most the IAP operators going

out of business. Market consolidation through mergers and acquisitions is also expected as there are toomany companies competing for a limited market.


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IAP CLASS A

Licensees

Financial

Position

Network Assets Customer

Base

Unique Selling Point Additional Notes

PowerTel

Communications

(Pvt) Ltd

GOOD > US$ 30 million < 50 000 CDMA broadband and VOIP

solution in two towns and 3

cities. High speed optical fibre

solution available in most cities.

Government owned company which is a

subsidiary of the Zimbabwe Electricity Supply

Authority. Company seems to be well run

and has collaborated with private companies

to build an Optical Fibre backhaul with aninternational gateway.

AFRICOM (Pvt)

Ltd.

FAIR < US$ 10 million < 50 000 CDMA broadband and VOIP

solution in four cities. Metro fibre

solution provider.

A going concern with very low cash flow.

Ecoweb (Pvt) Ltd VERY

GOOD

> US$ 20 million > 200 000 National Coverage of WiMax

broadband and VOIP with high

speed optical fibre solution

available across most towns and

cities.

Subsidiary of Econet Wireless Zimbabwe.

Dandemutande

(Pvt) Ltd

FAIR < US $20 million < 100 000 Good QOS WiMax and VOIP

Solution only available in the

capital city.

Good privately run company with a well-

managed network that is only available in

Harare.

Aquiva Wireless

(Pvt) Ltd

BAD < US $5 million < 20 000 WiMax and VOIP Solution

available in all cities and a few

towns. Metro fibre solutionprovider.

A going concern with low cash flow.

Aptics Trading

(Pvt) Ltd

BAD < US $5 million < 20 000 WiMax and VOIP Solution

available in all cities and a few

towns.

A going concern with low cash flow.

Telecontract (Pvt)

Ltd (t/a Telco)

VERY BAD < US $ 100 000 < 10 000 VSAT solution provider. No data or voice network deployed.

Currently

TelOne (Pvt) (t/a

ComOne)

FAIR < US$ 10 million < 100 000 Fixed line broadband using ADSL.

High speed broadband with VPN

and metro fibre.


subsidiary of TelOne. Has sufficient

bandwidth capacity over an Optical Fibre

backhaul with an international gateway.


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Transmedia

Corporation

BAD N/A N/A VSAT and Microwave data

backhaul solution provider.


subsidiary of the Zimbabwe broadcasting

Corporation. No data or voice network

deployed.

Valley

Technologies

(Pvt) Ltd

VERY BAD < US $20 million < 5 000 CDMA broadband and VOIP

solution provider.

Company is no longer a going concern as

money owed to local banks has not been

paid back due to poor network and bad

management.BlueSat Access VERY BAD < US $ 100 000 < 5 000 VSAT solution provider. No data or voice network deployed.

PECUS

ENTERPRISES

PRIVATE LIMITED

GOOD < US $20 million None Metro fibre solution provider. The last Company to be issued with an IAP

CLASS A license.


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Products

INTER SYSTEMS IT through its local Zimbabwean subsidiary COMPANY XYZ PRIVATE LIMITED plans tomake available a diverse product portfolio that will cater for a wide and diverse local market. Each

product is designed to ensure differentiation from existing competitors and present a unique selling

point. Where new products/services have been introduced INTER SYSTEMS IT has focused on making

sure that there is a good value proposition and strong customer demand. Based on our core business

strategy centred on providing a better customer experience all products will be converged with value

added services. There will be a mix of voice and data services in all products taking advantage of the

homogenous design of LTE networks at our disposal.

Voice Products

Product Description

Residential VoIP-Basic100 free minutes any network in Zimbabwe every month. Free

weekend calls on LTE network.

Residential VoIP-Weekends200 free minutes to any network in Zimbabwe every month. Free


Residential VoIP-Evening &

Weekends300 free minutes to any network in Zimbabwe every month. Free

evening & weekend calls on LTE network.

VoIP-SMESmall office up to 10 phone lines. Discounted local and

international call rates.

VoIP - Corporate10+ phone lines, remote VoIP server. Discounted local and

international call rates.

VoIP - Enterprise50+ phone lines, Dedicated local VoIP server, Branch

interconnections.

Mobile VoIP - LITE Pay as

you goMobile voice service which comes data bundle. Top up vouchers in

$1, $5, $10, $50

Mobile VoIP- Basic Pay as

you go

Mobile voice service which comes 1GB data bundle. 100 free

minutes any network in Zimbabwe every month. Free weekend

calls on LTE network.

Mobile VoIP-Life Style Pay

as you go

Mobile voice service which comes 2GB data bundle. 200 freeminutes any network in Zimbabwe every month. Free weekend

calls on LTE network.

Mobile VoIP Contract-

FreedomMobile voice service which comes 5GB data bundle. 400 free

minutes any network in Zimbabwe every month. Free evening and



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Broadband Internet Products

Product Description

Internet -SME 1Mbps, 50GB download per month.

Internet - Business 1Mbps, Unlimited download.

Internet - Enterprise > 2Mbps, Unlimited download including VPN.

Home Internet - Basic 512kbps, 2GB download per month.

Home Internet - 5GB 1Mbps, 5GB download per month.

Home Internet -

Unlimited 1Mbps, Unlimited download.

Mobile Broadband

(Life Style)

LTE mobile broadband for Smart phones,

Tablets and USB Dongles. Data rate 512kbps,2GB download per month.

Mobile Broadband

(Business)

LTE mobile broadband for Smart phones,

Tablets and USB Dongles. Data rate 1Mbps, 5GB

download per month.

Wholesale Broadband

- Tier1

Optical Fibre Backbone White Label bandwidth

leasing for Fixed and Mobile

Telecommunications Operators.

Wholesale Broadband

- Tier2Optical Fibre Backbone White Label bandwidth

leasing for Corporates, ISP and Data Centres.

IPTV Products

Product Description

IPTV - BasicFree view satellite channels + Radio & regional

programmes.

IPTV - Basic + Movies

Basic package + Choice of movies,

documentaries, Sport, Children & Teen

Channels, Music, News, Life Style.

IPTV - Unlimited The full TV and Radio offering with HD TV.

15sec Advertising on IPTVCommercial adverts on IPTV platform. One

advert aired once on off peak times.





30sec Advertising on IPTV Commercial adverts on IPTV platform. One


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45sec Advertising on IPTV Commercial adverts on IPTV platform.

Converged Products

Product Description

Quad Play - LiteResidential VoIP-Basic, Home Internet-Basic,

Mobile VoIP - LITE and IPTV-Basic.

Quad Play - Budget

Residential VoIP-Free Weekends calls on LTE,

Home Internet-5GB, Mobile VoIP- Basic and

IPTV-Basic +Choice.

Quad Play - Ultimate Residential VoIP-Free Evenings & Weekendscalls on LTE network, Home Internet-Unlimited,

Mobile VoIP-Life Style and IPTV-Unlimited.

PriceThe communications regulator in Zimbabwe POTRAZ stipulates the call interconnection charges

between all licensed operators. Any other pricing for voice calls, IPTV, advertising and broadband

internet access are the prerogative of the network operator.

Voice Products

ProductPrice US $

(Monthly)Price US $ (Yearly)

Residential VoIP-Basic $5 $60

Residential VoIP-Weekends $10 $120

Residential VoIP-Evening & Weekends $15 $180

VoIP-SME $135$1620 +

(US$ 350 Activation fees)

VoIP - Corporate $350$4200 +


VoIP - Enterprise $750$9000 +



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Mobile VOIP Pay as you go - LITE $5 $60

Mobile VOIP Pay as you go - Basic $10 $120

Mobile VOIP-Contract - Life Style $20 $240

Mobile VOIP Contract-Freedom $35 $420

Broadband Internet Products

ProductPrice US $


Internet -SME 1501800 +


Internet - Business 3754500 +


Internet - Enterprise 88510620 +


Home Internet - Basic $5 $60Home Internet - 5GB $10 $120

Home Internet - Unlimited $25 $300

Mobile Broadband (Life Style) $35 $420

Mobile Broadband (Business) $65 $780

Wholesale Broadband - Tier1 $5750$69000 +


Wholesale Broadband - Tier2 $2950$35400 +



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IPTV Products

ProductPrice US $


IPTV - Basic $15 $180

IPTV - Basic + Movies $35 $420

IPTV - Unlimited $50 $600

15sec Advertising on IPTV $750 $900020sec Advertising on IPTV $1000 $12000

25sec Advertising on IPTV $1200 $14400



Converged Products

ProductPrice US $

(Monthly)

Price US $ (Yearly)

Quad Play - Lite $100 $1200

Quad Play - Budget $150 $1800

Quad Play - Ultimate $200 $2400

Competitor Prices

Prices published by competitors in the telecommunications market


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Sales Volumes

Services Subscribers

Products / Services Year1 Year2 Year3 Year4 Year5 Year6

Residential VOIP-Basic 25,000 32500 42500 52500 60000 67500

Residential VOIP- Weekends 31,250 40625 53125 65625 75000 84375

Residential VOIP-Evening & Weekends 18,750 24375 31875 39375 45000 50625

Residential, VoIP 75,000 97,500 127,500 157,500 180,000 202,500

VOIP-SME 850 1105 1403 1700 1955 2125

VOIP - Corporate 225 293 371 450 518 563

VOIP - Enterprise 100 130 165 200 230 250

Business VoIP 1,175 1,528 1,939 2,350 2,703 2,938


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Mobile VOIP - LITE Pay as you go 350000 630000 1008000 1260000 1512000 1764000

Mobile VOIP- Basic Pay as you go 250000 450000 720000 900000 1080000 1260000

Mobile VOIP-Life Style Pay as you go 200000 360000 576000 720000 864000 1008000

Mobile VOIP Contract- Freedom 3000 5400 8640 10800 12960 15120

Mobile VoIP 803,000 1,445,400 2,312,640 2,890,800 3,468,960 4,047,120



Home Internet - Basic 3000 3300 3750 4200 4500 4800

Home Internet - 5GB 1200 1320 1500 1680 1800 1920

Home Internet - Unlimited 900 990 1125 1260 1350 1440

Home LTE Internet 5,100 5,610 6,375 7,140 7,650 8,160

Internet -SME 1050 1365 1733 2100 2415 2625

Internet - Business 550 715 908 1100 1265 1375

Internet - Enterprise 100 130 165 200 230 250

Business LTE Internet 1,700 2,210 2,805 3,400 3,910 4,250


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IPTV - Basic 2000 2600 3200 3700 4100 4500IPTV - Basic + Movies 1500 1950 2400 2775 3075 3375

IPTV - Unlimited 500 650 800 925 1025 1125

IPTV 4,000 5,200 6,400 7,400 8,200 9,000

Quad play - Lite 7000 9100 11900 14700 16800 18900

Quad Play - Budget 4000 5200 6800 8400 9600 10800

Quad Play - Ultimate 1500 1950 2550 3150 3600 4050

Triple Play Home 12,500 16,250 21,250 26,250 30,000 33,750

Mobile Broadband (Life Style) 4500 5850 7650 9450 10800 12150

Mobile Broadband (Business) 2500 3250 4125 5000 5750 6250

Mobile Broadband Tablets & Dongles 7,000 9,100 11,775 14,450 16,550 18,400


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Wholesale Broadband (Tier 1) 1 1 1 1 1 1

Wholesale Broadband (Tier 2) 3 3 3 4 4 4

Wholesale Broadband 4 4 5 5 5 5

15sec Advertising on IPTV 300 360 450 570 660 750





IPTV Advertising 1,304 1,569 1,959 2,480 2,870 3,260


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Financial Analysis


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Projected Revenues


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Opportunity Cost


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Options Analysis

To be added!

[Brief description of the different options considered for the project]- DO NOTHING

- ACQUISITION OF OTHER EXISTING NETWORKS- ACQUIRE A LICENSE FROM REGULATOR- LIMPOPO LTE Project (Big Bang Approach)- LIMPOPO LTE Project (Phased Approach)- LIMPOPO HSPA+ Project- LIMPOPO WiMax Project

Expected Benefits

To be added!

[Expressed in measurable terms against todays situation]Financial Analysis: NPVFinancial Analysis: ROI

Risks Analysis

To be added!

[Summary of the key risks of the project]


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SWOT Analysis

INTER SYSTEMS IT has carried out an in depth Strength, Weakness, Opportunities and Threats (SWOT)

analysis to fully understand the business case potential and risk. Identifying and understanding the

business environment is essential for COMPANY XYZ PRIVATE LIMITED to provide the right products and

services based on an accurate risk analysis.

Strength Weakness

1. Affordable Products and services.

2. Pricing based on Lifestyle.

3. Providing value added services which arenot currently available in market.

4. Value added revenue streams from IPTV

(Video on Demand) and advertising.

5. Deployment of the disruptive telecom

technology in LTE.

6. Technology agnostic, covering both voice

and data.

7. Experienced and commercially aware

human resources.

8. Product and technology leadership

expertise.

9. Acquisition of Green Field Operator in

Zimbabwe.

10.Extensive network coverage

11.Low energynetwork hardware elements

1. INTER SYSTEMS IT first nationwide rollout

of telecom services.

2. INTER SYSTEMS IT will be a late entrant in

the Zimbabwe Telecom market.

3. Project is leveraged on affordable finance.

4. Limited management experience in

telecom network operations.


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Opportunities Threats

1. Growing voice and internet data market in

Zimbabwe.

2. Huge market opportunity for Mobile data

3. Increased consumer demand driving

growth in market.

4. Opportunities for new services in market.

5. Poor network coverage for both data and

voice still exists.

6. Huge potential for value added service

with prepaid products and lock in period

to maintain ARPU level.

7. Stable currency in Zimbabwe, currently

using US$.

8. Robust cash flow based on strong demand.

9. Growing Economy with huge Gold,Diamond, Platinum, Steel and Natural Gas

mining resources.

1. Weak Regulation may constraint long term

growth.

2. Competition from two well established

Telecom players.

3. Low disposal Income.

4. Availability of affordable LTE handset.

5. Political instability.

6. Skilled Telecom professionals.

7. Inconsistent power supply.

8. Delay in project roll out

9. Poor Governance and Economic policies.

10.Breach of contractual agreements with

local companies.

Strength

1. Affordable Products and Services

Currently the Zimbabwean telecommunications market is categorised as highly pricesensitive and

this will increase in near future as competitive intensity increases. INTER SYSTEMS IT planned

deployment of LTE will give our product services a competitive advantage. LTE will provide both

basic and value added services that will differentiate our network from the Incumbents operators.

Product pricing will therefore be intrinsically linked to the cost of project finance and will effectively

determine the depth of discounting. Gaining substantial market access is a key requirement for a

profitable business with an affordable product and service based on intelligent pricing as leverage.


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This project has a number of price plans in macro segment products at very competitive rates for all,

calculated to encourage competitor churn, customer retention and long term profitability within all

market segments targeted.

Some of the introduced product services will be new in the market based on advanced technology(LTE) hence opening up new untapped revenue streams.

Detail of pricing and services is shown in the Product and Price section of this document.

2. Product based on lifestyle

The Limpopo project will plan its consumer products and services around customer profile

demographic information to effectively target infrastructure investment.

These product will target certain category of market and specifically product designed to suite there

requirement and purpose. Tariff plan has also been aligned accordingly.

3. New value added services introduced

Project has created new value added services like IPTV, Office VoIP, Telephone customer support

centres (Call Centres) , HD voice calls, telephone conference solutions, and video call just to mention

a few. These services are currently not available in Zimbabwe. Based on projected demand these

new value added services will generate significant revenues in the five year horizon due to there

being no competitors with similar products. There are indeed tremendous possibilities to gain

significant market share especially in niche segment service sectors. These services are only possible

with LTE technology hence giving COMPANY XYZ Private Limited an advantage.

4. Generation of extra revenue from advertisement

Advertising will be another new revenue stream created on top of the IPTV (Video-on-Demand)service. Pricing plans will be based on the time slot, programme schedule and the advert length.

Proliferation of subscription based television is currently provided through satellite technology. The

introduction of IPTV to the market will provide a local and cheaper service. In addition localised

advertising as an additional business service will be very attractive to companies and will bring in

additional revenues.

5. Latest telecom technology LTE

At the heart of the business and its projected revenue will be premised on rolling out the latest

technology in Mobile communication. LTE technology will provide a new user experience and

services which are currently not available using existing network infrastructure. Fixed line as well as

mobile voice and data services will all use LTE as this provides the most cost efficient method to

deliver a better QOS than existing technologies.

The following advantages of LTE over older technologies are highlighted below.

a. LTE provides decrease in latency and improved user experience. Latency is

approximately 10ms, which will be much more desirable for users on mobile network

using realtime interactive networks


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b. Lower cost of service Due to better energy efficiency and reduced number of network

elements.

c. Higher network capacity - Making possible for higher data rate services at a lower cost

d. Wider channel bandwidth A proportional higher amount of data can be sent over

these frequencies, spectrum can be used more efficiently, achieving higher data rates

e. Higher Average Revenue per User- Lower cost bit, boost ARPU as shift from voice centric

revenue to data centric revenue.

f. Increased peak data rates and spectral efficiency- Peak rates reach up to 50 Mbps on

the uplink and 100 Mbps on the downlink for 20 MHz of spectrum. This reduces the cost

of spectrum fees.

6. Technology covers both voice and data

Limpopo project will rollout both voice and data version of LTE (VoLTE) which will be one of the first

networks in Africa.

This technology will provide a real competitive edge over the other telecom provider in Zimbabwe.

Not only will this technology give COMPANY XYZ Private Limited an unrivalled competitive edge in

data services but will also cover voice which is still in high demand and considerable mass market

service product.

7. Experienced Manpower

INTER SYSTEMS IT is a company driven by professionals who are highly experienced in telecom

industry with an average experience of 12 years. COMPANY XYZ Private Limited currently employs

experienced and qualified staff with both technical and management skills to take on this project.

8. Product and technology leadership

This project will offer products that are not available in current market at very competitive price but

new converged services.

9. Extensive Network coverage

The planned network rollout will cover 70% of the population with 90% of all towns and citiesreceiving both voice and data services. This deployment approach will give customers confidence in

the service delivery of the network and encourage more users to join.

10.Low energy network elements

LTE networks are designed with energy efficiency and intelligent power saving features that can turn

transmitters and receivers on or off depending on the load and go into an idle state. During quite


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Key facts:

GDP - USD $11 bn GDP per capita USD $698 FDI USD $125m Budget deficit 2.8% Inflation 2.5%

Currency Multiple Currencies(USD, EURO, GBP, PULA andRAND)

periods (night time) when the number of users on the network is low the eNB systems can also go

into power saving mode.

PESTEL Analysis

INTER SYSTEMS IT has carried out an in-depth analysis of the Political, Economic, Social, Technological,

Environmental and Legal (PESTEL) analysis to fully understand the business case potential and risk.

Political

The political history of Zimbabwe in the last decade has been turbulent and simply not presented

confidence to investors due to poor government policy making, inadequate protection of property

rights, weak government institutions such as the judiciary and ineffective policing of current laws. Thiscoupled with disputed elections and a shaky collision government saw the countrys economy suffer

negative growth from 2000 to 2008. However since the African Union (AU) and Southern African

Development Community (SADC) sponsored Government of National Unity (GNU) was signed the

political atmosphere has been considerably stable. This has immensely contributed to GDP growth

which had contracted by 45% during the period of 2000-2008. Improved macroeconomic stability,

associated with full dollarisation, liberalisation of grains, minerals marketing and high price of

commodities have fostered a turnaround of the Zimbabwean economy in 2009-2011. There has been

continued disagreement thus far between the coalition parties about indigenisation laws which have

been approved but suspended to new investors and banking institutions operating in Zimbabwe. The life

of the constitutional parliament ends in June 2013 and new elections will soon take place under a newconstitution. The conduct of these elections will be key barometer on future political stability going

forward.

Economic

According to the World Bank, Zimbabwes economy is recovering from a decade -long crisis that saw

economic output decline every single year during the period

1999 to 2008, with a cumulative decline of more than 45

percent. However, supported by a strong recovery of

domestic demand and government consumption, overall,

real GDP grew by 20.1 percent between 2009 and 2011.

Despite the government operating on a cash budgetprinciple, the budget balance for 2011 (-3.2 per cent of GDP,

is an improvement on the level of -4.3% recorded in 2010.

Projections for 2012 and 2013 are similar at -2.8% and -3.0%

respectively.

Annual inflation declined from 4.3 percent in January 2012 to

2.5 percent in January 2013. In January 2013, annual food

and non-food inflation stood at 3.7 percent and 1.9 percent respectively. Key drivers of annual inflation


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in January 2013 included education (13.0 percent); housing, water, electricity, gas and other fuels (10.7

percent) and transport (6.4 percent). The main factors that contributed to the decline in annual inflation

in January 2013 included wines (-8.7 percent) and clothing material (-5.8 percent). Month-on-month

inflation for January 2013 declined to 0.07 percent from 0.13 percent in December 2012. Month-on-month food and non-food inflation stood at 0.32 percent and -0.06 percent respectively. Thus, non-food

items were the main factor underpinning the decline in month-on-month inflation in January 2013. In

general, food items have been the main driver of both annual and month-on-month inflation. Policy

measures targeted at increasing the supply of food and the reduction of food prices were expected to

lead to lower inflation levels. Inflationary developments in the short to medium term will continue to be

influenced by the US dollar/rand exchange rate, inflation developments in South Africa, international oil

prices and local utility charges.

Source: ZIMSTAT

Nominal GDP as of end 2012 is estimated at US$11 billion, with GDP per capita at US$698. GDP was led

by strong growth in:

Mining (107%),

Agriculture (35 %)

Services (51 %)

Manufacturing sector (22 %)

Mineral exports increased by 230 percent over the 2009-2011 period, while value of agricultural exports

increased by 101 percent over the same period

Strong external demand for primary commodities (platinum, gold, cotton and tobacco) has supported

higher production levels, which have recovered pre-2000 levels in terms of values. Foreign direct


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Key facts:

US $618.3 in aid assistance

HIV infection rate reduced from 29% in 2007to 14% in 2010

Literacy rates increase from 85% to 91% dueto more Government investment intoEducation.

Improved Mortality due to better healthservice provision.

investment (FDI) inflows into the country were projected at USD 125 million in 2011, a marginal increase

from USD 123 million in 2010.

The Current Account has now been fully liberalised, allowing authorised dealers to process alltransactions for imports without seeking prior exchange control approval. In 2011, imports amounted to

USD 6.28 billion, an increase of 148% over the USD 2.53 billion recorded in 2010. The increase in foreign

payments is attributed to the countrys continued dependence on imported goods and services due to

subdued domestic production due to political and economic turbulence. Exports amounted to USD 3.67

billion in 2011, 65% above the USD 2.22 billion in 2010.

The financial sector in Zimbabwe is regulated by the Ministry of Finance through the Reserve Bank of

Zimbabwe (RBZ). On the 6th of April 2010, government signed a new RBZ Bill which outlines the

activities and mandates of the RBZ. The new Act also resulted in the establishment of the RBZ Board

chaired by the RBZ governor, and a Monetary Policy Committee. The RBZ is also in charge of theExchange Control Act of 1964 as amended. Other interested ministries are the Ministries of Economic

Planning and Development and the Ministry of Industry and International Trade.

The countrys financial sector is relatively more developed than other countries in the region although

is hindered by significant structural issues presently. These are being addressed by amending corporate

governance guidelines and direct intervention of RBZ. The banking sector is generally highly competitive,

and institutional investors are active players in public securities markets. The deposit base grew from

US$3.1 billion in January to US$3.73 billion in September 2012. Zimbabwes securities markets are

served by a depth of service providers. (Source:http://www.zimbabwe-stock-exchange.com )

Socio cultural

The excessive macro-economic imbalances

experienced between 2000 and 2008 had

extreme consequences for development and

poverty situation in Zimbabwe. The collapse of

the economy by 2008 resulted in a collapse of

social services, especially in the areas of health,

education, and access to water and sanitation

and also increased the levels of unemployment

and poverty.

With the support of donors, the Government

has through targeted financing, improved

services in education and health as well as enhanced food security (African development Bank).

According to USAID, in 2011 development partners pledged USD 618.3 million focusing on humanitarian

assistance, targeting health, education and social protection programmes, as well as agriculture, energy,

water and sanitation and governance. However, the support is off budget. Though not part of the
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Key facts:

Access to Seacom undersea datacables.

Access to WACS undersea datacables.

3 mobile network providers Increase mobile penetration rate to

87% Strong demand for data services

budget and government control, per se, the basket funded multi-development partners investments in

social sectors in Zimbabwesuch as under UNICEFs Education and Health Transition Funds have

promoted joint programming, implementation, monitoring and evaluation. The following funds are

operational under the management of UNICEF: the National Action Plan for Orphans and Vulnerable

Children Phase II (2011/15), implemented with the support of the Child Protection Fund; the Education

Transition Fund II; and the Health Transition Fund. The budget allocation towards education increased

from 12.3% of the budget in 2010 to 22.8% in 2011 and 25.1% in 2012. The result of this sustained

increase in budget support for education has seen literacy rates increase from 85% to 91% of the

population. Similarly, the allocation for health care budget increased from 7% in 2010 to 9.3% in 2011

and 8.6% in 2012 hence contributing to a marked improvement in mortality. Allocations to the water

sector improved from 0.1% in 2010 to 1.4% in 2011 and 1.8% in 2012. This funding has also helped in the

prevention and treatment of HIV/AIDS, tuberculosis and malaria. Furthermore, schools and hospitals

that had closed and scaled down operations have re-opened and scaled up their operations. The focus

of donor support on humanitarian assistance has largely facilitated this recovery of the social sectors.

Technological

The Postal and Telecommunications Regulatory

Authority of Zimbabwe (POTRAZ) is a body corporate

established in terms of the Postal and

Telecommunications Act [Chapter 12:05]. POTRAZ is

mandated by law to issue licenses in the postal and

telecommunications sector, and to set the terms and

conditions for activities in the sector. According to

POTRAZ there are currently 12 licensed Internet Access

Providers in Zimbabwe (TelOne, Africom,

Dandemutande, Aquiva, Ecoweb, PowerTel,

Telecontract, Aptics Trading, Valley Technologies, Transmedia Corporation, Pecus Enterprises and Blue

Sat Access ). CommIT and NetOne are the only companies with a Class B IAP license whilst the rest have

CLASS A licensees. The difference being that CLASS A licensees are allowed to operate VoIP services in

addition to the public data and internet networks that class B licensees do.

SEACOM, which is a company running a high-speed Internet cable along Africa's east coast, announced

that it reached a deal with Mozambique to provide a new link to landlocked Zimbabwe. Under the

agreement, the state owned company Telecomunicacoes de Mocambique (TDM) will allow its fibre-

optic network to be used to link Zimbabweans to the 13 700-kilometre cable running along the coast. As

of February 2012, state owned fixed telephone network operator, Tel One, has invested US$ 7.7 million

into the optical fibre project which will link the capital city Harare to Beira in Mozambique via the

eastern border city of Mutare. Econet Wireless has spent in the region of US $66m connecting through

Durban. An estimated 70% of the population did not have access to banking services, however, to


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Key facts:

Reduced time to register abusiness

Reduction in corporate tax

Reduction in capital gains tax

enhance inclusive banking, banks have introduced mobile banking products in conjunction with mobile

phone service providers.

According to statistics released by POTRAZ 2012, the countrys mobile penetration has jumped from63.9% to 87%. Other released Key performance indicators showed a moderate rise in internet

broadband and fixed line telephone services.

Environmental

Floods, Drought or other natural disasters...

Legal

Despite the mixed signals, the authorities are taking steps to

improve the business climate. Zimbabwe has eased business

start-up by reducing registration fees and initiated a process tospeed up the name search process and company and tax

registration. In addition, the corporate income tax rate was

reduced from 30% to 25%, the capital gains tax was lowered

from 20% to 5%, and the payment of corporate income tax was

simplified by allowing quarterly payment through commercial

banks. This has resulted in Zimbabwe moving up in its ranking

according to The World Banks Doing Business Report 2012.

The main taxes in Zimbabwe are enacted by the following acts

The Income Tax Act (covers income taxes of individuals and companies and withholding taxes).

The Finance Act (specifies periodic changes to the tax acts such as rate changes)

The Capital Gains Tax Act (covers capital gains taxation and capital gains withholding taxes)

The Value Added Tax Act (covers value added taxes)

The Customs and Excise Act (covers customs and excise duties but should be read in conjunctionwith the statutory instruments on rates of duties)

The Stamp Duties Act (covers stamp duties on certain instruments and immovable properties)

General regulations are available in support of some of the Acts.

In addition, Zimbabwe has also recently concluded Bilateral Investment Promotion and Protection

Agreements (BIPPAs) with the Governments of South Africa and Botswana respectively. These BIPPAs

are aimed at providing reciprocal security of tenure to South African and Botswana investments inZimbabwe but which expressly protects only new investments. BIPPAs are being discussed with other

countries including Namibia, Brazil, Tanzania, India and South Korea.

A law was enacted by the Government of Zimbabwe in 2007 (prior to the formation of the Government

of National Unity) that set as an objective that all businesses in Zimbabwe should have a majority

shareholding by indigenous Zimbabweans. This law empowered the Minister responsible for its


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implementation to issue regulations aimed at achieving this objective. These regulations have been

issued in 2010 and 2011. The basis requirements of the law and regulations are as follows:

All existing businesses with a net asset value of US$ 500 000 or more must achieve a majorityshareholding by indigenous Zimbabweans within five years.

Businesses affected by the legislation are required to submit plans to the Minister as to how theyintend to achieve the required level of indigenous shareholding in the required time period.

All new investment, both domestic and foreign, must have a majority shareholding by indigenousZimbabweans.

More stringent requirements have been made for the mining sector. However, there are certain

important points to note:

There is no provision in the legislation for the Government of Zimbabwe to forcibly take over or

nationalise any business. There is no provision in the legislation for any Minister to withdraw the operating licence of a

business simply because its indigenisation plan is not deemed to be satisfactory.

There is provision in the legislation for a lesser share of indigenisation than 51%, or a longer timeperiod, in order to achieve other socially or economically desirable objectives. Corporate social

responsibility, or social credits, may be taken into account in the indigenisation process.

The Minister responsible has the power to authorize a lesser level of indigenisation in the case ofnew investments. It must be seen as significant that the recent investment in 2010 by an Indian

company, Essar, in a steel manufacturing company in Zimbabwe, valued at US$ 750 million, has

given the foreign investor a 54% shareholding in the local company.

Analysis

The table below represents the probability impact grid for the weakness and threats identified in the

SWOT analysis. The vertical axis of the grid represents the probability range with 0.1 being most unlikely

chance of a threat or weakness occurring and 0.9 being the higher likely an event taking place. The

probability of a threat or weakness occurring is plotted against the Impact hence giving INTER

SYSTEMS IT a good understanding on how to prioritise risk mitigation.


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Risk Probability Impact Assessment

Very High

0.9W1, W4

High

0.7W2 W5, T2

Medium

0.5T4, T6,T7 T3, T5 T1, T8, T9

Low

0.3

W3

Very Low

0.1T10

Very Low

0.1

Low

0.3

Medium

0.5

High

0.7

Very High

0.9

Very High

0.9

High

Impact


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HIGHRisk mitigation plan required and regular

monitoring.

MEDIUMRisk mitigation plan required and periodic

monitoring.

LOW Risk mitigation required and periodicmonitoring.

Risk Mitigation

Risk

Id

Risk

Probability

Risk Detail Mitigation

0.7

Medium

0.5

Low

0.3

Very Low

0.1

Very Low

0.1

Low

0.3

Medium

0.5

High

0.7

Very High

0.9


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Impact

W1HIGH

INTER SYSTEMS IT will be carrying out

a nationwide rollout of telecom

service for the first time.

The RF planning, network design,

deployment and project management ofthe network rollout will be outsourced to

specialist companies or network vendors

with the required experience.

W2LOW

INTER SYSTEMS IT will be a late

entrant in the Zimbabwe Telecom

market.

1. Introduce competitive productpricing

2. Offer innovative products.

W3LOW

Project is leveraged on finance 1. Fixed long term interest rate will beopted

2. Financial prudence throughout the

project life cycle.3. Debt reduction by listing on the local

stock market.

W4 HIGHLimited management experience in

telecom operations

Recruit foreign professionals to key

management positions.

T1HIGH

Weak Regulation constraint long term

growth

Seek constant legal advice and frequent

consultation with the Regulator during

the project life cycle

T2

MEDIUM

Competition with well establish

Telecom player

1. New services will be introduced inthe market

2. Advance disruptive technology and

equipment Marketing innovation toreduce costs

3. Intelligent and efficient top-up salesdistribution and supply process

T3MEDIUM

High level of Poverty and Low disposal

Income

Tariff plans based on lifestyle and income

groups:

1. Low cost tariff solutions2. Discounts and Promotions

T4LOW

Availability of affordable LTE handsets. Approach Chinese and Taiwanese OEM

handset manufacturers for low cost

handsets.

T5 MEDIUM Political instability Insurance against country specificpolitical risk

T6LOW

Skilled Telecom professionals. 1. Recruitment from other regionalcountries.

2. Use of foreign consultants.3. Setup an internal training program to

improve employee skills.


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T7LOW

Inconsistent power supply. Use of diesel generators and backup

batteries.

T8HIGH

Delay in project roll out 4. Provision for penalty clauses onservices provided by third parties and

subcontractors.

5. Project managed internally (INTERSYSTEMS IT) with clear project

deliverables and timelines.

T9 HIGH

Poor Governance and Economic

policies.

Long term planning with focus on

country specific economic data.

T10 LOW Breach of contractual agreementswith local companies. Employ legal consul to give advice on on-going contractual agreements.


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Financial Cost Analysis


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Project Timescales

[Summary of the Project Plan]

Investment Appraisal

[Illustrates the balance between the development, operational, maintenance and support costs against the financial valueof the benefits over a period of time]Financial Analysis: ROIFinancial Analysis: IRRFinancial Analysis: NPV


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STEERING COMMITTEE

Approved by the Steering Committee:

INTER SYSTEMS IT LTD

Signature :

Name :

Title :

Date :

COMPANY XYZ PRIVATE LIMITED

Signature :

Name :

Title :

Date :

Limpopo Lte Business Case Online Draft

Documents

Transcript of Limpopo Lte Business Case Online Draft