Industry slams govt Telecel takeover

MUTARE - Industry has slammed government’s seizure of a controlling stake in Telecel Zimbabwe (Telecel) in a controversial $40 million deal, saying the whole transaction reeks of double standards since the State is supposed to be the regulator and not a player.

This week, the cash-strapped Zimbabwean government acquired a majority stake in Telecel for a song in a clear sign of foreign investor intimidation.

Telecel’s parent company, VimpelCom Limited, on Wednesday announced that it had entered into an agreement with government for the disposal of its 60 percent stake in Zimbabwe’s third largest mobile telecommunication company for $40 million.

However, economic analysts said a market evaluation conducted by a reputable audit firm placed Telecel market capitalisation at a little over $200 million.

This is supported by the fact that Economic Empowerment, which owns 40 percent in Telecel, early this year wanted to dispose its shares for $40 million.

Confederation of Zimbabwe Industries (CZI) President Busisa Moyo told delegates at a business meeting held at a local hotel that government needed to concentrate more on creating policies and not joining the private sector — through acquisitions of  companies.

“Government should not be taking over Telecel. It should concentrate on creating policies and not trying to be part of the private sector,” Moyo said.

The sale came in the face of souring relations between VimpelCom and government after the latter in April this year cancelled Telecel’s operating licence ostensibly because the company had failed to follow the country’s indigenisation laws.

Analysts have queried the whole deal that involves an insolvent government company Zarnet, citing the fact that the Economic Empowerment, which owns 40 percent in Telecel, early this year wanted to dispose its shares for $40 million.

The transaction, being handled by Zarnet (Private) Limited (Zarnet) — according to a report on parastatals by Auditor-General Mildred Chiri for the financial year-ended December 31, 2014, has already been described by analysts as a political move.

VimpelCom, which is Netherlands-headquartered, last year, put its stake in the mobile operator on the market and received a bid from a foreign investor, but government blocked the transaction on the basis that it had not received any capital gains tax from previous transactions involving Telecel.

In September this year, VimpelCom’s chief group business development and portfolio officer Anton Kudryashov told the Daily News that much as the company wanted to invest more in Zimbabwe and create jobs, the Zanu PF government was frustrating its efforts.

“We don’t feel welcome in Zimbabwe and it’s not good.

“We want to feel appreciated for what we are doing and we would like to see our licence fully restored,” he said.

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