The Zimbabwean government has reportedly cancelled Telecel Zimbawe’s operating licence ahead of plans to buy out the current shareholders.
Local media cited ICT minister Supa Mandiwanzira as saying the government decided to cancel the licence since…
The Zimbabwean government has reportedly cancelled Telecel Zimbawe’s operating licence ahead of plans to buy out the current shareholders.
Local media cited ICT minister Supa Mandiwanzira as saying the government decided to cancel the licence since the operator has failed to pay a US$137.5m fee. As such, he said shareholders – VimeplCom’s Global Telecom Holding, and local consortium Empowerment Corporation [EC] – may only engage the government in talks on the future of their assets.
Any attempts to sell Telecel Zimbabwe shares to others may be seen as fraudulent, he added.
According to a Nehandra Radio report, the government plans to call a meeting with current shareholders this week to discuss the future of the operator.
Authorities are believed to want to buy them out and then seek out new investors, the report added.
Harare-based private equity firm Brainworks Capital had expressed interest in acquiring VimpelCom’s indirect 60% stake in the telco. The firm already had an agreement in principle to buy EC’s 40% stake for US$20m in cash, provided EC shareholders approved the transaction at an upcoming EGM. It was also looking for assurances from VimpelCom on its intentions.
However, local media reported late last week that EC shareholders have now called off the EGM and plan to sell the 40% stake to Brainworks. This reportedly followed a disagreement between EC shareholders James Makamba and Jane Mutasa which prompted the latter to seek a court order to stop the EGM and deal with Brainworks. Mutasa and the co-applicants reportedly argued that the proposed deal undervalued their shares.
Meanwhile, EC managing director Patrick Zhuwao contended in a court document that Telecel Zimbabwe is technically insolvent and needs US$300m to stay afloat.
VimpelCom has come under pressure from Zimbabwe’s government to sell down its stake to a minority holding in recent years, and was reported to be courting bidders last December.
The country’s Indigenisation and Economic Empowerment Act stipulates that previously-marginalised black Zimbabweans must hold at least 51% in any local registered firm.
However, the enforcement of the act is at the government’s discretion and can be waived if a settlement can be reached.
The local ownership issue almost led to the government blocking the renewal of Telecel’s 2G and 3G licences in 2013. The operator’s spectrum was renewed on the condition that it addressed its ownership situation. But since then, its shareholding structure has not changed.
Telecel Zimbabwe, the ICT ministry, Brainworks and VimpelCom were not immediately available for comment.
