Government discussing Telecel buyout

15 Jul 2015

Zimbabwe’s government is set to acquire the struggling mobile operator Telecel as it aims to ramp up its presence in the country’s telecoms sector. A report from News Day quotes an unnamed source as saying: ‘Telecel shareholders have offered to sell their interests in the business to government. Government has gladly accepted the offer as it sees this as an opportunity to reorganise the sector. Negotiations are currently underway.’ CBZ Bank is thought to be acting as the financial advisor to the transaction, with the deal expected to be carried out via state-owned internet service provider (ISP) Zarnet.

Telecel is currently 60%-owned by Russian-backed, Amsterdam-based Vimpelcom, with the remaining 40% held by a consortium of domestic investors under the umbrella of the Empowerment Corporation (E Corp). Vimpelcom and some of the E Corp members have been looking to offload their shares for some time. The cellco was ordered to cease operations earlier this year for not paying licence fees and contravening a foreign ownership cap of 49%, though it managed to win a high court reprieve which has allowed it to continue operating pending an appeal over the revocation of its licence. Telecel says its has met all required licence payments under a seven-year instalment plan agreed with sector regulator POTRAZ, though the government argued that POTRAZ had no authority to set up such an arrangement in the first place; the entire board of the regulator was recently dismissed.

As reported in yesterday’s CommsUpdate, nationalised fixed line operator TelOne is looking to capitalise on its dormant mobile licence by partnering with state-backed sister company NetOne, which is Zimbabwe’s second largest cellular provider by subscribers. Acquiring Telecel would give the government ownership of three out of four wireless operators, assuming TelOne does go ahead with its plans for a launch; only market leader Econet Wireless would be privately owned. There has been some speculation in local press that the government has been trying to force the hand of Telecel shareholders so that it could snap up a valuable asset at a knock-down price and then seek a strategic partner such as MTN of South Africa, which has repeatedly been linked as a potential buyer.

Zimbabwe, Telecel Zimbabwe