Zimbabwe’s government has confirmed that it is on the verge of taking over the Russian-owned Vimpelcom stake in Telecel Zimbabwe, the country’s third biggest cell phone network operator.
Last year, Zarnet, a private company owned by Zimbabwe’s ICT ministry inked a 40 million US dollars deal to buy the 60% stake in Zimbabwe’s third largest cell phone network operator.
Finalising the transaction has faced delays because of the local banks liquidity challenges. Zimbabwe’s Telecoms Minister Supa Mandiwanzira says the takeover is expected to end foreign ownership in the telcoms sector, boosting the local empowerment policy. With the takeover, the Zimbabwe government will shore up its ownership in the local telecoms industry.
Telecel Zimbabwe boasts a two and a half million subscriber base. The government already runs loss making parastatal NetOne, the second largest network operator in the country which 4 million users.
“The funds some of them are still in Zimbabwe and because of issues relating to liquidity and the funding of nostro accounts (a bank account held in a foreign country by a domestic bank) the entire amount has not been remitted outside of the country. In terms of our own agreement the sale is considered concluded when the all that money has left the shores of Zimbabwe,” says Mandiwanzira.
If we look at the makeup of the telecoms industry in this country, there are no foreign players
Under pressure from Zimbabwe to comply with the local majority ownership laws, Russian-owned, Amsterdam based Vimpelcom sold its 60 % stake in the company. The remaining 40 % share is owned by a local consortium.
“This acquisition is localising an international entity it is going to be a Zimbabwean entity, where they were paying management fees to Switzerland and Amsterdam, those monies will no longer be leaving the country,” says Mandiwanzira.
He said the takeover enhances the government’s indigenisation plans. “If we look at the makeup of the telecoms industry in this country, there are no foreign players.”
The local empowerment group is said to be offloading share possibly to the state body the National Social Security Authority.
Mandiwanzira says it will sanitize the company. Telecel has faced multiple ownership wrangles among the local consortium composed of individuals, black businesses, women and farmers groups.
The government believes the company has market value of 250 million dollars. It has said once it acquires the stake it may exercise the right to offload the stake in future including to foreign companies.