HomeBusinessGovt to buy Telecel

Govt to buy Telecel


Government is set to buy the entire shareholding of Telecel Zimbabwe, the country’s third largest mobile operator, as it moves to increase its influence in the telecommunications sector.


There is a feeling within government that its entities have performed dismally despite getting preferential treatment and the swoop on Telecel is seen as a step towards maintaining a significant presence in the capital-intensive but highly lucrative sector.

ICT, Postal and Courier Services minister Supa Mandiwanzira told State broadcaster ZBC yesterday that Telecel’s two
shareholders — Amsterdam- headquartered VimpleCom and Empowerment Corporation (EC) — have offered to sell their interest in the business to government. VimpleCom and EC have 60% and 40% equity respectively.

The move comes at a time when Telecel won a court reprieve in May against the cancellation of its operating licence by the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz). Potraz had given Telecel 30 days to wind up its operations after reportedly failing to pay for the licence fees. But the mobile operator contends that it had never defaulted in paying instalments on the licence fees under the seven-year payment period.

Officials in the ICT ministry indicated that it was improper for Telecel to have softer terms when other operators such as NetOne and Econet were told to pay in full.

“Telecel shareholders have offered to sell their interests in the business to government. Government has gladly accepted the offer as it sees this as an opportunity to reorganise the sector. Negotiations are currently underway,” a source said, adding that CBZ Bank were the financial advisors to the transaction.

It is understood that government Internet service provider, Zarnet, is at the forefront in the acquisition process.

Mandiwanzira refused to shed more light on the matter referring all questions to Zarnet.

Industry sources say the move by government was seen as a possible way out to save jobs and restore order at the operator where internal squabbles within EC, the local empowerment consortium, have not helped matters.

It is also understood that Telecel owes government in unpaid taxes and if penalties were applied, it would worsen its financial position, said a government official.

“This exposure to government [taxes and licence fees] could give Zarnet an upper hand in negotiations,” the government official told NewsDay.

It could not be established what would government do if it successfully acquires the mobile operator.

There is an option of merging it with State-owned mobile operator NetOne and create the critical mass that would be able to compete with Econet Wireless Zimbabwe. Another option would be to sell the shareholding to another company.

Zarnet’s acting managing director Evans Vete said he was not aware of any plans by his company to buy Telecel Zimbabwe.

“If there are any developments, it will be in the interest of the public to know that,” he said.

Telecel Zimbabwe was established in 1998 to operate a mobile phone network. The company has been hamstrung by shareholder disputes especially in EC which has stunted its growth. The company has witnessed a high turnover of managing directors as a result of the squabbles.

Founded in 1997, Zarnet is a provider of ICT solutions.

Recent Posts

Stories you will enjoy

Recommended reading