Finnfund

PowerCom, a new operator that launched its service in 2007, has reduced phone charges and improved network coverage. It also makes new services available to phone users. These are all important matters in a developing country where the population of two million has spread out in the large country.

PowerCom is using the name “Cell One” in marketing in Namibia.  Its largest shareholder is a holding company TEP, which has received a credit from Finnfund for the launch of mobile services in Namibia. Among the project’s other financiers are Norfund - the Norwegian development finance institution, Afrinvest - an investment bank that specializes in Africa, the Development Bank of Namibia and two private South African banks operating in Namibia, Investec Bank Ltd. and Nedbank Capital.

TEP is an investment company operating in telecommunications. Among its owners are former employees of Norway’s Telenor company. Other shareholders of PowerCom are NamPower - the Namibian state power company, Nam-MIC – the investment arm of the mine workers’ union, the Old Mutual Namibia insurance company and an educational trust set up to promote Namibian technology training projects.

Phone network from Nokia

PowerCom’s mobile phone network is being supplied by Nokia Siemens Networks. The network was launched in the area around the capital, Windhoek, in March 2007. Next it will be rolled out in populated northern regions and then in coastal areas.

PowerCom has some 120 employees in Namibia, fifteen from abroad and the rest locally recruited.

The competitor is MTC, the only operator in Namibia before PowerCom was licensed. MTC is owned by the State of Namibia and Portugal Telecom and provides coverage in almost all populated areas of the country. However the number of mobile phone users has increased so steeply and so rapidly that the market is big enough for two operators.

PowerCom aims to seize a share of more than a third of this fast-growing market.

New services for mobile users

PowerCom intends to offer better services than its competitor.  The operator is building a 3G network that can be used for transferring data as well as for normal phone calls.

“More sophisticated technology opens windows for extra services such as mobile banking. This is important in a country where there are few bank branches,” says Finnfund senior investment manager Mikko Kuuskoski.

Finnfund decided to invest in the project, he explains, because PowerCom is a good example of business that also has a significant development impact. Furthermore the company’s shareholders have long experience in telecommunications.

“When a second operator enters a market, it stimulates competition. This in turn leads to price cuts and better service and quality. These are important for economic and social development,” says Mikko Kuuskoski.

There are only about 2 million inhabitants in Namibia and only just over 20% currently use a mobile telephone. The country covers some 800 000 square kilometres, so it is more than twice as large as Finland.

For an African country, Namibia is typical in that it has entered the mobile era in a short period of time. There are already three times more mobile phones than fixed ones and the gap is quickly getting wider.

For Finnfund the PowerCom project is its first investment target in Namibia. The country has long been a partner in Finland’s bilateral development cooperation, dating from the moment of independence in 1990. Finnish missionary work has an even longer connection with Namibia, stretching back more than a century.

The relationship between Finland and Namibia is now entering a new period as development cooperation takes a back seat and cooperation in the years ahead comes to focus increasingly on trade, finance and cultural exchange.

For more information at Finnfund please contact Mr Mikko Kuuskoski tel. +358 9 3484 3380, email firstname.lastname@finnfund.fi