Mobile phone boom eludes Zimbabwe as crisis bites

HARARE, June 26 (Reuters) It is a cold winter night in central Harare, but 100 people are willing to queue on the pavement until the shops open in the morning.

The glittering prize? A mobile phone SIM card.

''I had no choice, this was the only way of securing a SIM card at a reasonable price,'' said Sam Takavada, emerging from a local dealer for Zimbabwe's largest mobile phone operator, Econet, after a night in the queue.

Takavada considers himself lucky after paying 3 million Zimbabwe dollars () a pay-as-you-go card that will link him to a mobile phone network and comes with airtime. Most are forced to buy SIM cards on a thriving black market, where prices climb to 25 million Zimbabwe dollars.

Zimbabwe offers a sharp contrast to the rest of Africa, where mobile phone use is spreading rapidly as an alternative to unreliable and expensive fixed lines.

But foreign currency shortages have hamstrung network expansion and growth in Zimbabwe's mobile phone sector, capping penetration at around 5 per cent of the population, compared to 70 per cent in South Africa or around 40 per cent in Namibia.

West Asian, South African and European firms are scrambling for a foothold on the rest of continent, with South Africa's MTN recently offering 5.53 billion dollars for Dubai-based Investcom.

But Zimbabwe, crippled by economic crisis, is different. The country has three mobile operators, Econet Wireless, state-owned Net*One and Telecel Zimbabwe, majority-owned by Orascom Telecom's Telecel International.

The government has failed to attract foreign investors to pump money into debt-saddled Net*One and fixed-line operator TelOne.

Dakarayi Matanga, spokesman at Econet Wireless, Zimbabwe's biggest cellphone operator, said about 95 per cent of the company's key components were sourced abroad.

''Therefore any significant network expansion can only take place if and when the company can access enough hard currency to import network equipment,'' he said.

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