Telecel directed to surrender 20% of its stake

Published: 23 July 2013

EMPOWERMENT Corporation will soon increase its shareholding in Telecel Zimbabwe to 60 percent after Government directed controlling shareholder Telecel International to surrender 20 percent of its stake.

Transport, Communications and Infrastructural Development Minister Nicholas Goche yesterday said he had directed Telecel to engage Empowerment Corporation over the excess shareholding in the firm.

Minister Goche said he told Telecel International to go back to the original 60-40 shareholding structure with local partners, Empowerment Corporation, as the controlling shareholder.

"I said to them talk to Empowerment Corporation and go to the original 60-40 position in favour of Empowerment Corporation. I told them to ensure that they finish this as soon as possible," he said.

"But Empowerment Corporation will have to pay for those shares (from Telecel International)," Minister Goche said.

Telecel was, however, not given specific timelines within which to comply.

Addressing the skewed shareholding structure will be key for Telecel Zimbabwe to renew its mobile phone operator's licence, which expired last month.

It is against this background that Telecel International managing director Mr John Swaim and legal counsel Mr David Dobbie were in Zimbabwe last week to discuss the issues with Government.

Telecel International holds a 60 percent stake in Telecel Zimbabwe, but terms of its licence issued in 1998 require that it sells 20 percent to local investors.

Mr Swaim said last week that they held meetings with officials from the Ministry of Transport, Communications and Infrastructural Development to discuss the shareholding and licence issues.

"We had big meetings with the telecoms ministry and the Ministry of Finance and the topic of discussion was licence renewal and the discussions on licence renewal went very positively.

"We committed to have this resolved very soon. Interestingly, the Ministry of Finance and Ministry of Telecoms decided that they will grant us an extension of time to resolve the licence renewal and to resolve the ownership issues," said Mr Swaim.

Apparently, Telecel has been let off the hook after it got away with just pledges to quickly address the shareholding anomaly, which it has done many times before, but without acting on its words.

The firm seemed cornered recently after Minister Goche indicated its licence would not be extended until it had resolved the shareholding issues.

"We need to do this quickly, but nobody has stated any particular time-frame although it was emphasised that we need to get these issues sorted," he said.

The Telecel International officials said Government had been treating the licence and shareholding issues separately and did not demand that they be addressed simultaneously.

But he said they would work on both issues at the same time after they were given more time to work on the issues. They pledged to do this sooner rather than later.

Mr Swaim said Telecel Zimbabwe was in discussions with its 40 percent local shareholding partner Empowerment Corporation over the disposal of the 20 percent as stated in its licence.

Empowerment has since engaged financial and legal advisors as negotiations continue on the sale of the excess stake in the hands of the foreign investors.

Telecel International said it had taken long for the issues to be addressed because the licence was re-issued with the same conditions in 2002 following the inception of the Postal and Telecommunications Regulatory Authority of Zimbabwe. The cellular licence was first issued in 1998.

The licence was re-issued because of the need to issue it in terms of the Postal and Telecommunications Act which was enacted in 2000.

Nonetheless, it took longer than expected for Telecel International to shed the excess shareholding.

"Very active attempts to resolve the shareholding issue started in 2004 so it is not an issue that has been lying dormant, but there have been a number of complications on our side of the equation.

"These now appear to be coming to resolution that will enable us to get past some of the hurdles we faced," the Telecel International executive said.

Telecel International insisted that transferring majority stake to locals would not affect its position on the Zimbabwe investment as the company was a strategic technical partner and also held the management contract of the company.
- herald

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