A report from Zimbabwean newspaper The Herald is claiming that local mobile operator Telecel could be worth only a quarter of the value that shareholders are trying to raise from the sale of their stakes. Barclays Bank International, which is managing the sale of a 60% interest on behalf of Russia’s Vimpelcom, has valued Telecel at USD200 million, while certain members of the Empowerment Corporation (E Corp) consortium, which holds the remaining 40% stake, have also cited a valuation of USD200 million.
Financial analysts quoted by The Herald, however, say Telecel is worth just USD50 million, or even less, claiming that the firm is ‘practically bankrupt with no ability to meet its short-term and long-term liabilities’. In addition, the government has suspended an agreement which gave Telecel five years to pay its licence renewal fee which was due in mid-2013, meaning the cellco is in danger of losing its operating concession altogether.
A number of E Corp members have been looking to offload the consortium’s 40% interest to local private equity firm Brainworks Capital for USD20 million, which would tally with The Herald’s lower valuation, though other E Corp investors are threatening legal action to halt the sale. Financial analyst Respect Gwenzi is quoted as saying: ‘While the earnings potential of the company [is] huge, the fact is that there has been a lot of value destruction, mainly on the back of inefficiency and management ineptitude.’