Telecel’s licence cancelled; company launches appeal

13 Aug 2007

The Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) has cancelled the operating licence of the country’s smallest cellco, Telecel Zimbabwe, for breaching foreign ownership laws. A statement issued by the regulator on Thursday evening said that the 15-year concession, issued in June 1998, was cancelled under the Postal and Telecommunications Act, as Telecel’s owners had failed to ‘regularise the company’s shareholding structure, which was heavily skewed in favour of foreigners’. ‘In terms of the conditions of this licence, the foreign ownership of the company should be limited to not more than 49% as required by the Act’, the statement continued. The regulator had given Telecel a deadline of 30 June to change its shareholding structure or risk losing its licence. Telecel International owns 60% of the firm’s shares, with 40% owned by Empowerment Corporation (EC), a local consortium. Last month, two partners in EC, James Makamba and Jane Mutasa, agreed to pay USD3.5 million to Telecel International for an 11% stake and overall control of Telecel Zimbabwe, but the legality of the transaction was questioned by other EC investors and remains in dispute. Mr Makamba’s firm Kestrel owns 23% of EC whilst Indigenous Business Women’s Organisation, headed by Mrs Mutasa, owns a 17% stake in the consortium. In November last year it was reported that President Robert Mugabe’s nephew, Leo Mugabe, failed in a bid to acquire 11% of Telecel from Telecel International after being refused permission from EC, and rumours have surfaced alleging that Mugabe influenced POTRAZ’s decision to cancel Telecel’s licence. Other rumours point to an alleged government plan to take over the cellco via state-owned rival GSM operator NetOne.

Telecel Zimbabwe has filed an urgent High Court application to force POTRAZ to reverse the cancellation of its licence, and the matter has been set for hearing on 15 August. The company insists that its shareholding structure conforms with the law. Its 225,000 subscribers were reportedly still receiving network service last Friday.

Zimbabwe, Telecel Zimbabwe