Telecel takeover above board

Netherlands-based integrated telecommunications services operator, VimpelCom, says the disposal of its 60 percent shareholding in Telecel Zimbabwe (Telecel) was above board.

This was after Empowerment Corporation (EC), which owns 40 percent in the local mobile operator, had recently threatened to sue VimpelCom for breach of pre-emptive rights.

Through their lawyers Titan Law Chambers, the consortium said VimpelCom's sale of Telecel to the government - via Zarnet and the National Social Security Authority (Nssa) - was "null and void", as it breached their existing shareholder's agreement.

However, the Nasdaq-listed telecommunications group yesterday denied any wrongdoing and insisted the Telecel deal was transparent.

"VimpelCom, the ICT ministry and Zarnet are working closely to conclude the sale of VimpelCom's stake in Telecel with all due expediency," the company's spokesperson Rozzyn Boys told the businessdaily.

"VimpelCom has acted in full transparency at all times with our partners, who have been fully aware of our intention to sell to Zarnet for many months, and any contentions otherwise are without merit," she added.

The latest development somehow dampens EC's contention or claims that it had "only learnt of the deal" through the media.

"In the previous months, there has circulated in the local and international media details, the effect of which give the impression that VimpelCom has effectively disposed of its beneficial interest in Telecel . . . ," the investment grouping's lawyer Gerald Mlotshwa said in a letter to VimpelCom, which was also copied to the American Securities and Exchange Commission and several other local authorities as well as interested parties.

"Notwithstanding the existence of a shareholder's agreement, our client, EC, has been deliberately shut out of this process of ‘disposal' absolutely by Telecel International, and, ultimately, VimpelCom," he added.

This was after VimpelCom had indicated last year that it agreed to sell its entire shareholding in Zimbabwe's third largest mobile group to Zarnet - in a transaction financed by Nssa - for $40 million.

But EC felt that it was "not afforded the opportunity to exercise its pre-emptive rights" as a junior partner and investor in the odd 18-year-old company.

"Compounding matters are public pronouncements by the minister (Supa Mandiwanzira) responsible for the telecommunications sector in Zimbabwe to the effect that government has ‘taken over' Telecel Zimbabwe under terms that are unclear to us, as has been the source and mechanisms of the funding in respect of such declared acquisition,"  Mlotshwa said.

Further, the feisty commercial lawyer told VimpelCom that his client was contemplating legal action or proceedings against the Nasdaq-listed firm and the Zimbabwean government over the Telecel sale.

" . . . particularly in instances where the present allegation is that a portion of the purchase price in the amount of $10 million was financed by the telecommunications regulatory authority in Zimbabwe. For the record, this regulatory authority... does not have the power to finance acquisitions of this nature,"  Mlotshwa said.

" . . . our client hereby formally demands that VimpelCom and Telecel International make available to it all agreements regarding the ‘disposal' of any interest in Telecel . . . in order that it decides whether or not to exercise its pre-emptive rights," the Titan Law Chambers founder added.