Telecel operations hang in the balance

Telecel Zimbabwe (Private) Limited (Telecel)'s operations are hanging in the balance as the country's mobile regulator has threatened to withdraw its licence due to non-compliance with empowerment laws.

This comes as the Postal and Telecommunications Regulatory Authority (Potraz) had in August 2013 partially agreed to renew the company's licence on condition that the Telecel International (TI) subsidiary would cede a majority share to locals in line with the country's indigenisation policy.

In a January 06, 2015 letter, Potraz acting director general Baxton Sirewu told the company's general manager (GM) Angeline Vere that her company had failed to honour the commitment it made in August 2013, when its licence was renewed.

"Your licence was renewed subject to payment of the initial licence fees and the regularisation of the shareholding structure. We have waited for more than a year for an update on your compliance with the indigenisation requirements," said Sirewu.

"…your non-compliance with the indigenisation laws has stalled the issuance of your licence document and you cannot continue to operate without a licence document," he added.

According to the letter, Sirewu had summoned Telecel to his Mount Pleasant corporate suite to discuss the issue.

After the mid-2013 fiasco, Telecel faced a disconnection from other networks as it was deemed to be operating illegally – an issue, which seems to be haunting it again – and the uncertainty also comes as TI has signalled an intention to dispose of the local asset.

The wireless network operator is 40 percent owned by Empowerment Consortium, while TI owns 60 percent.

Having been granted an operating licence in 1997, the company has lurched from one crisis to another, including endless boardroom squabbles amongst the empowerment grouping.

John Swaim, Telecel's chief executive and a representative of the foreign investor, was unreachable for comment Tuesday.

And as the company has often negotiated for periodic reviews, if not relief, the express condition has always been that "the ownership structure must be regularised within a period of five years from the commercial date of the licence."

Since then, President Robert Mugabe's successive governments have always given Zimbabwe's second largest mobile service provider ultimatums to change its shareholding, but it has regularly failed.

While Information and Communication Technology minister Supa Mandiwanzira could not be drawn into commenting as he is on leave, Sirewu was also unavailable for comment on the outcome of the January 09 meeting as he was said to be at an all-day workshop.

In the absence of Vere, Telecel communications director Obert Mandimika said he was not aware of the developments and the meeting in particular.

"Probably they (Potraz) met the shareholders," he said.

Last year, the company also battled the Harare administration over concerns that it had failed to pay its licencing fees, but it took the unusual step of proving that it had paid its renewal fees by outing one of its bankers as the culprit for its misfortune.

Apart from a statement confirming its staggered payments for the hefty fees and that it had engaged two banks to transmit the cash, the company blamed Metropolitan Bank for its woes and failing to remit $6 million to government.

"…we can confirm that Telecel, a long standing customer of Metbank, has a credit balance… with us. They have issued a payment instruction…. to transfer $6 000 000 in favour of the Ministry of Finance," Felix Kumirai, the stricken bank's executive director for investment banking, said in an August 09, 2013.

"While we would normally effect such a transfer instruction immediately upon request by our customer, we are currently unable to do so because of the prevailing liquidity constraints," he said.

And in a follow-up dispatch to the Metbank fiasco last year, Vere advised Nicholas Goche's Transport and Communications ministry that the telecoms group was making frantic efforts to have the $6 million paid in an October 10 letter.

"We have engaged Metbank to register securities to cover the amount they (are) holding with a view of using such securities to raise the $6 million owed to you," she said, adding they expected the process to be through by mid-November.

At the time, the James Makamba-led company not only stressed that it was on course to fulfilling its obligations, but stated that it had until December 2014 to pay for the second instalment the statutory fees.

"The agreed fee for the renewal of the organisation's licence was set at $137.5 million to cover the next 20 years. Telecel entered into negotiations… (resulting)… in an agreement with Potraz together with the… Ministry of Transport & Communications and the Finance ministry to pay the license fee over an agreed period with a deposit of $14 million being paid forthwith," Vere said.

"Our records at hand will confirm that instructions to pay the deposit were immediately processed through our banks," she added, stating further that "both banks (Metbank and CBZ Bank Limited) had confirmed to regulatory, and ministry officials the obligation they have to Telecel to meet this commitment".