HomeBusinessMinister defends Telecel takeover

Minister defends Telecel takeover

Government is not creating another loss-making enterprise by buying 60% shareholding in Telecel Zimbabwe, ICT, Postal and Courier Services minister Supa Mandiwanzira has said.


Last week, Global Telecom Holdings, a unit of Amsterdam -headquartered telecoms services provider VimpelCom, announced that it sold its 60% stake in Telecel Zimbabwe to ZARNet in a deal worth $40 million.


ZARNet is a government-owned ICT solutions provider.

The acquisition of Telecel has raised fears that another loss-making parastatal has been created to be an albatross on the already burdened taxpayer.

But Mandiwanzira said the venture would be profitable, adding that ZARnet would buy out the other 40% owned by Empowerment Corporation, a coalition of local empowerment outfits, to wholly own the country’s third largest mobile operator by subscribers.

“Government is not in the business of creating loss-making enterprises. We will prove you and those with such thinking otherwise,” he told Standardbusiness.

The acquisition of Telecel means that government will have a firm grip on the telecoms industry as it already owns NetOne and TelOne. There were indications that government would merge Telecel and NetOne to build the critical mass to take head-on Econet Wireless which controls over 50% of the market share. There were also suggestions that government would restructure Telecel and then sell a significant chunk of shareholding to a foreign mobile operator in the mould of MTN to ensure that it becomes profitable and bring dividend to Treasury.

“There is no immediate plan to merge. We believe they must compete on the market and the leadership [must] sweat to keep their jobs,” Mandiwanzira said.

Telecel has in the past fought battles with the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) after the regulator early this year ordered the company to cease operations as it had no valid licence. Telecel challenged the move at the courts and was allowed to operate as it was adhering to its payment plan for the $137,5 million licence fee.

Critics say government could have used the licence impasse as a bargaining tool when acquiring the 60% stake.

Mandiwanzira, however, said ZARnet had no “time to respond to nameless and faceless critics”.

“Suffice to say, nothing could be further from the truth. We bought this business not from Nyamuzihwa Enterprises but from a global player listed in Egypt and on the Nasdaq. They would never sell under threat. This transaction was handled by professional advisors in London, Amsterdam and Harare. There is no way it would have been underhand,” he said.

Does government intend to be a dominant player in the ICT business?

Mandiwanzira said government recognised that telecoms was the most profitable, strategic and lifestyle changing industry of today and the future.

“Not even oil and gas, diamonds or gold are as profitable as telecoms. It’s going to be even super profitable with the internet of things. So government is looking into the future. It needs a fair stake of technology industries that people will depend on to live,” he said.

“Otherwise our people will be vulnerable to profit motives of the private sector. We need a balance.”

The acquisition comes at a time government has been trying to force operators to share infrastructure in what critics say was meant to allow State-owned operators to catch up with Econet Wireless which has invested heavily in infrastructure.

What is so special about Telecel?
The country’s third largest mobile operator has so much potential but was hamstrung by shareholders’ fights, especially in Empowerment Corporation — a consortium of local groups with 40% stake in Telecel. This has stymied its growth to a point where it has failed to declare dividend to its shareholders since inception in 1998.

According to a first quarter report by Potraz, Telecel had 4 443 716 commanding 17,5% of the market share behind Econet (55,8%) and NetOne (26,7%). This means that it has potential to grow the numbers.

It has gained acceptance from subscribers introducing competition in the cut-throat telecommunications sector. It fought pound for pound with the largest mobile operator Econet for subscribers.

When other networks downgraded contract subscribers to pre-paid in the last days of the Zimbabwean dollar era, Telecel maintained the package.

The company would beat its own drum years later saying it had remained true to its commitment to offer a personal, quality service notwithstanding that difficult times sometimes necessitate drastic measures.

“During the challenging times, we kept you roaming, and our contract customers remained unaffected without switching off packages or being forced to pay something upfront. We believe this is what makes for our valued relationship — in good or bad times,” Telecel said in one of its adverts taking a pot-shot at rivals.

But this potential has been affected by power struggles in EC. The mobile operator has also seen a high turnover in chief executive officers. The list of former CEOs includes Antony Carter, Rex Chibesa, Aimable Mpore, Francis Mawindi and John Swaim, among others, which effectively killed continuity in the organisation.

Contrast that to NetOne which has had one CEO since inception or Econet Wireless that has had three bosses since 1998.

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