Telecel takeover in new twist

National Social Security Authority (Nssa) said it will relinquish its controlling stake in Telecel Zimbabwe to Zarnet after three years, as a way of protecting its investment.

This was after the deep-pocketed pensions administrator poured in $30 million to help Zarnet secure $40 million it needed to acquire a 60 percent stake in Telecel Zimbabwe from Telecel International.

Under the initial agreement, Nssa only acted as a financier but later indicated that it wanted overall control of the country's third largest mobile telecommunications company on the premise that the technically-insolvent Zarnet may not be able to pay back the $30 million debt.

The State-run pension fund's chairman, Robin Vela, yesterday said his organisation was engaging Zarnet to restructure the deal.

"The two parties are in advanced negotiations in relation to restructuring the transaction; wherein from a Nssa perspective it will culminate in an acceptable equity return and enhanced security arrangements, whilst the Zarnet perspective translates to a feasible and favourable financing structure.

"The effect of the new dispensation is that Zarnet will exercise the buy-back over a three year period on terms enshrined in a new agreement involving a number of related-parties to Zarnet," Vela said, in his fourth quarter 2016 update.

This comes as recent reports indicated that Nssa was not "entirely happy" about the prospect of losing out on an equity holding in Telecel Zimbabwe - or just playing the role of a financier and - where it sees huge opportunities for rich pickings, and acquiring an asset that can add value to its policy holders.

Although Vela believes that Nssa - given a chance - has the capacity to turn around Telecel Zimbabwe,

ICT minister Supa Mandiwanzira, however, insisted that Zarnet is buyer and owner of Telecel, not Nssa.

"Zarnet is the buyer of the Telecel shareholding from VimpelCom, and it paid its own money ($10 million), except the $30 million secured through a funding structure with Nssa," he said in an interview recently.

"The structure is such that Zarnet will secure the equity interest and for its part Nssa is getting a bargain buying debt of $98 million for only $45 million. In order to ensure a smooth execution of the deal, Zarnet and Nssa have agreed a step-in agreement which allows Nssa to enjoy Zarnet's rights as the purchaser, albeit temporarily.

"The agreement between the two parties is to that effect.

"Obviously, we understand where Nssa is coming from. They have to protect pensioners' funds and that's why the two parties have agreed on that sort of a structure," Mandiwanzira added.