Trouble brewing over Telecel stake?

15 Mar 2010

Mobile operator Telecel Zimbabwe, a subsidiary of Egyptian group Orascom Telecom, is weighing up options for the overdue divestment of an 11% stake to local shareholders, which it said last month it is hoping to carry out soon, the Zimbabwe Independent reports. The newspaper also says that local investors are in dispute over rights to the stake, part of the parent company’s 60% holding that it must reduce to comply with government policy restricting overseas companies from majority-owning telecoms companies, as well as empowerment policy compelling foreigners to sell 51% stakes to black-owned entities. There have been delays in implementing these regulations though, and in the case of Telecel there have been problems deciding which empowerment group should receive shares.

TeleGeography’s GlobalComms database says that Telecel Zimbabwe is owned by Telecel Globe (60%, formerly Telecel International), itself owned by Orascom Telecom, and the local Empowerment Corporation (40%), itself comprising Kestrel (23%), IEG (18%), Indigenous Business Women’s Organisation (17%), National Miners’ Association (14%), Zimbabwe Farmers’ Union (14%) and Magamba eChimurenga (14%). The Empowerment Consortium was given pre-emptive rights to acquire an 11% stake from Telecel International by the government. However, James Makamba and Jane Mutasa, the respective heads of Kestrel and Indigenous Business Women’s Organisation, have been in dispute over the eventual recipient of the shares. The Independent says that Mutasa, currently in custody for allegedly defrauding Telecel, and ‘fugitive’ businessman Makamba both continue to claim rights to the 11%. Sources are quoted as saying that although Telecel allegedly prefers the idea of selling to Makamba, he left the country in August 2005 in the wake of externalisation charges, making it unlikely that he could gain regulatory approval for the transaction. Meanwhile, Mutasa reportedly clashed with executives from the parent company earlier this year, but claims pre-emptive rights over the shares. Telecel is also considering a share option scheme to solve the issue, therefore placing the shares in the hands of a neutral party, the paper’s unnamed sources said.