Zim government says offered Telecel stake after blocking sale to foreign investor

Zim government says offered Telecel stake after blocking sale to foreign investor

By Kuda Chideme, HARARE July 15 (The Source) – Telecel shareholders, Vimplecom and local consortium, Empowerment Corporation have offered to sell their shareholding in Telecel Zimbabwe to government after the state blocked the Dutch telecommunications giant from disposing of its stake to a foreign investor, a minister said on Wednesday.

Telecel is currently embroiled in a legal battle with government over the cancellation of its operating licence in April, with the state alleging that the company had failed to comply with local ownership regulations and to renew the licence.

The firm got a temporary reprieve to continue operating after the High Court suspended the cancellation pending finalisation of its legal fight with the government. Telecel went on to pay a $5 million installment in June as part of the $137,5 million for the licence.

Amsterdam headquartered VimpelCom, which owns 60 percent of Telecel — the country’s third largest mobile telecoms firm with over 2.4 million subscribers — last December put its stake in the mobile operator on the market and invited bids from interested investors.

Information and Communication Technologies minister Supa Mandiwanzira told Parliament that the decision to block the Telecel sale was made on the basis that government had not received any capital gains tax from previous transactions involving Telecel.

“Since last year, Vimplecom has been on the market selling its interests on the African continent, including Telecel Zimbabwe. The company had almost reached an agreement with a company outside Zimbabwe and government took a deliberate decision to stop this transaction,” said Mandiwanzira.

“We made a decision that Zimbabwean assets cannot be traded outside the country without the country benefiting from the issues of capital gains.”

Mandiwanzira said Vimplecom then “offered to the government of Zimbabwe their 60 percent” shareholding.

The local consortium, Empowerment Corporation (EC) which holds a 40 percent stake in Telecel also wrote to the government offering to sell its shareholding, he added.

Government is looking to buy the company through its wholly owned entity ZARnet, which was established in 1997 as a government Internet Service Provider (GISP).

The parastatal has no experience in telecommunications and lists on its website that it offers ICT solutions and e-learning platforms.

“As you may be aware government does not have enough resources to be financing that kind of transaction so it has given this interest to one of its wholly owned entities, ZARnet to pursue it in a commercial sense and it (ZARnet) is in the process of negotiating,” said Mandiwanzira.

Government already controls another mobile operator in NetOne, which has 3,3 million subscribers according to latest official data as well as fixed line telco, TelOne.

The Zimbabwean consortium is made up of warring groups that include affirmative action pressure groups, war veterans, a farmer union, a small-scale miners’ association and an investment vehicle owned by James Makamba, a former ZANU-PF politician who fell out with President Robert Mugabe’s ruling party years back.

Mugabe’s nephew, Patrick Zhuwao, is the managing director of the EC.

Zhuwao plunged the consortium into internecine warfare in January when he pushed for the sale of EC’s 40 percent stake to Brainworks Capital – an emerging force on Zimbabwe’s largely inactive corporate deal scene – for $20 million in a transaction that would have valued Telecel Zimbabwe at $50 million.

The transaction suffered a stillbirth after a raging dispute between EC shareholders.

  • Mauya

    What a mess, suffice it to say that these guys are
    INCORRIGIBLE