Telecel: Govt shuts out private investors

HARARE - The cash-strapped Zimbabwean government is bulldozing its way into “buying” Telecel Zimbabwe (Telecel) after it pushed out bids from local companies, that wanted to inject fresh capital into the mobile communications company, the Daily News has learnt.

This comes after Information Communication Technology (ICT) Postal and Courier Services minister Supa Mandiwanzira told the National Assembly on Wednesday that Telecel shareholders had offered government through its internet service provider, Zarnet to take over the company.

“Recognising that government doesn’t have immediate financial capacity to buy into the company, government chose one of the entities it owns 100 percent to pursue the transaction.

“This was after the major shareholder in Telecel — Vimplecom, which holds 60 percent and the Empowerment Corporation — which has a 40 percent shareholding in the company had both written to government offering their respective shareholding,” Mandiwanzira said.

The ICT minister said government stepped in when it emerged that Telecel ownership had changed hands twice, with foreigners taking over but not remitting capital gains tax.

“We came to a position that Zimbabwean assets could not continue being traded without capital gains tax. So as most of you may be aware, Vimplecom sold a 60 percent stake in one of its Algerian businesses to government, so the same arrangement was implemented,” he said.

However, questions are being raised on government’s capacity to buy Telecel when it is struggling to raise cash to fund its day to day activities.

Documents seen by the Daily News show that Kingvile Investment — one of several companies which bid to buy Telecel in March this year — was being elbowed out of the race to ensure that government has a 100 percent shareholding in the telecommunications firm.

Kingvile intended to complete the takeover at an equity value of $100 million in which the Telecel International (a subsidiary of Vimplecom) would pocket $600 000 while the minority shareholders (Empowerment Corporation) were entitled to $400 000.

“Due to the existing Telecel debt of over $200 million against a total asset base of $200 million, the true cost to Kingvile for acquiring 100 percent is an enterprise value of over $300 million,” reads part of the document Kingvile presented to Telecel.

The company also sought to issue a five percent stake to the Employee Share ownership Plan in order to provide an ownership interest to over 400 Telecel workers.

“Kingvile will also disburse a further $130 million to local telecommunications regulator Potraz on or before June 30, 2015 to clear the outstanding balance on Telecel’s mobile licence valued at $137 500 000 of which $8 million was previously paid by Telecel in 2013,” reads the bid.

It was also envisaged by Kingvile that the company would inject $390 000 into Telecel between July 2015 and June 2016 “for the rollout of a Next generation all IP telecommunications network platform with converged fixed-mobile service delivery comprising 4G,LTE Fibre, Wifi,VSAT, IMS-VoLTE,IPTV,CCTV,Mobile Money,M2M,Cloud and other platforms...”.

The company intended to source $500 million from Project Financing ex International Investment Bankers while the other $120 million would be availed by Equipment and Device Financing ex Network Equipment and Device Vendors.

When contacted for comment over the allegations, Mandiwanzira said he was not prepared to comment.

“I am not going to say anything more than what I said in Parliament yesterday (Wednesday). Concerning claims that government does not have money, again, I do not wish to comment on such poverty views,” said Mandiwanzira.

Telecel — with over 2,2 million subscribers — is currently embroiled in a legal battle with government over the cancellation of its operating licence.

Comments (6)

Once again ma shef akuita sacrifice the good of the nation on the alter of self-gratification, this blatant abuse of powers needs to stop, pamberi neZimbabwe, pamberi nekubudirira kwevana vese veZimbabwe kwete iwe chete Supa

Ndakambokuudzai - 17 July 2015

Government has no business chasing after Telecel when it has its work cut out for its own telecom assets including NetOne and TelOne. Instead of focusing on fixing the above state owned operators, the state is digging deeper into a quagmire where it will be worse off with no funds to capitalize the 3 operators and let alone making them competitive to match up with Econet which is way ahead in this game. Shame on it!!!

Bozo - 17 July 2015

sounds like had been headed for greatness with Kingville

0K - 17 July 2015

Now that the goings on at National IndigInisation and Economic Empowerment Board (NIEEB), are in the public domain through Parliament, ref the harsh exchange between (Tyson) Kasukuwere and Mayor Wadyajena, may i request your paper to do an investigation in to the recruitment process right at its inception ,around 2010 or thereabout,when David Chapfika was the Chairman of the Board. The interviews for the position of Human Resources Manager were done with Chapfika chairing and a gentleman from Gweru was the best candidate and he was advised to come to Harare for the signing on formalities by the Chief Executive Officer Mr Gwatiringa only to be told that the results had been reversed and that he was no longer the best candidate. I assume this was a directive from the Chairman Chapfika, of course since the CEO was happy to appoint the Gweru Guy. The man from Gweru was then promised that he would be given another job in the Provinces when they roll out offices later but this did not materialise with the CEO giving excuses ndokubva nyaya yangofa yakaloader.!! They then appointed a crony of Chapfika, i assume to the position of Human Resources Manager but he WAS NOT THE BEST CANDIDATE at the interviews. Huwori hwakadii uhu? It thetrefore means that the organisation started on a wrong footing ye jobs for the boys, and the poor guy from Gweru, without connections asi awana basa, akabva atonyimwa basa racho. Kuitawo here uku. You could give this information to the Parliamentary Portfolio Committee Chairman, Wadyajena, pamwe zvingabatsira to shed light on the corruption in the public sector.

Tafirei Mpambadzire - 18 July 2015

Kingvile uyu sounds shady. $300m yacho vanoiwanepi? Econet Zim is valued at just over $300m.

kufktuv - 18 July 2015

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