Business / Companies
Government yet to court the Empowerment Corporation over Telecel
13 Dec 2015 at 08:59hrs | Views
THE envisaged complete takeover of Telecel Zimbabwe by Government might take long amid indications that the new majority shareholder is yet to engage the minority shareholders – the Empowerment Corporation.
The EC holds 40 percent stake in the telecommunications company while Government, through ZARnet, recently acquired the 60 percent stake that was held by VimpelCom Limited of Holland.
ZARnet is a wholly owned State entity established in 1997 as a Government Internet Service Provider (GISP).
Immediately after snapping up the Telecel Zimbabwe stake; Information, Communication and Technology, Postal and Courier Services Minister Supa Mandiwanzira expressed Government's willingness to own 100 percent of the company so as to "sanitise the organisation".
This meant Government would have to engage the EC, which comprises of Dr James Makamba's Kirstel Corporation (23 percent), Dr Jane Mutasa (17 percent), the Integrated Engineering Group (18 percent) and Magamba eChimurenga, National Miners Association, Zimbabwe Farmers Union (all 14 percent).
EC is said to be willing to offload its stake in Telecel. In February this year, some shareholders sought to engineer a US$20 million deal with private equity firm Brainworks Capital. However, the proposed deal was wrecked at the eleventh hour after Dr Mutasa blocked an extraordinary general meeting slated for February 20, 2015 to approve the sale.
Last week, EC legal advisor Mr Gerald Mlotshwa told The Sunday Mail Business that Government is yet to approach them with a view to acquiring the 40 percent stake they hold.
Mr Mlotshwa said the EC last held formal discussions with Government in April this year. They are not privy of the VimpelCom/ ZARnet transaction in respect of Telecel Zimbabwe.
"We have absolutely no documentation or information other than that reported in the media regarding that transaction.
"Empowerment Corporation's position was communicated to Government in early April, 2015. We have not heard from Government formally since that time other than the allegations of the Government's position appearing in the media.
"Empowerment Corporation will remain a shareholder of Telecel Zimbabwe P/L until such a time when it accepts an offer acceptable to it in respect of its shareholding," said Mr Mlotshwa.
Pressed to reveal the nature of discussions held in April between Government and EC, Mr Mlotshwa declined and said, "Sorry, I cannot do that presently. It is confidential and privileged correspondence."
Minister Mandiwanzira had promised to comment on the issue on Tuesday last week but he was neither picking his phone nor returning calls made during the course of the week.
The EC is on record saying it is keen to sell its stake but only "at the right price".
In a recent interview, some EC shareholders confirmed knowing about the acquisition of Telecel Zimbabwe by Government and said they were amenable to selling their 40 percent stake.
One of the shareholders said the EC would not mind working with the new majority shareholder, especially considering that they are "from the same country with them".
Telecel has been enmeshed in controversy since establishment.
Early this year, Government cancelled Telecel's operating licence after it failed to regularise its shareholding structure in sync with the dictates of the Indigenisation and Economic Empowerment Act which calls for 51/49 percent ownership in favour of locals.
The mobile phone operators had also failed to renew its licence but got a temporary reprieve after the High Court suspended the cancellation pending finalisation of its legal battle with Government.
Telecel then paid a US$5 million instalment in June as part of the US$137.5 million for the licence.
Shareholder wrangles have also ravaged the EC since 1998, largely centering on who held what percentage of shares following massive reorganisations that have taken place from company formation.
Telecel is Zimbabwe's third largest mobile telecoms firm with over 2.5 million subscribers.
Government already owns another mobile phone company – NetOne – which has about 3.3 million subscribers.
The EC holds 40 percent stake in the telecommunications company while Government, through ZARnet, recently acquired the 60 percent stake that was held by VimpelCom Limited of Holland.
ZARnet is a wholly owned State entity established in 1997 as a Government Internet Service Provider (GISP).
Immediately after snapping up the Telecel Zimbabwe stake; Information, Communication and Technology, Postal and Courier Services Minister Supa Mandiwanzira expressed Government's willingness to own 100 percent of the company so as to "sanitise the organisation".
This meant Government would have to engage the EC, which comprises of Dr James Makamba's Kirstel Corporation (23 percent), Dr Jane Mutasa (17 percent), the Integrated Engineering Group (18 percent) and Magamba eChimurenga, National Miners Association, Zimbabwe Farmers Union (all 14 percent).
EC is said to be willing to offload its stake in Telecel. In February this year, some shareholders sought to engineer a US$20 million deal with private equity firm Brainworks Capital. However, the proposed deal was wrecked at the eleventh hour after Dr Mutasa blocked an extraordinary general meeting slated for February 20, 2015 to approve the sale.
Last week, EC legal advisor Mr Gerald Mlotshwa told The Sunday Mail Business that Government is yet to approach them with a view to acquiring the 40 percent stake they hold.
Mr Mlotshwa said the EC last held formal discussions with Government in April this year. They are not privy of the VimpelCom/ ZARnet transaction in respect of Telecel Zimbabwe.
"We have absolutely no documentation or information other than that reported in the media regarding that transaction.
"Empowerment Corporation's position was communicated to Government in early April, 2015. We have not heard from Government formally since that time other than the allegations of the Government's position appearing in the media.
"Empowerment Corporation will remain a shareholder of Telecel Zimbabwe P/L until such a time when it accepts an offer acceptable to it in respect of its shareholding," said Mr Mlotshwa.
Pressed to reveal the nature of discussions held in April between Government and EC, Mr Mlotshwa declined and said, "Sorry, I cannot do that presently. It is confidential and privileged correspondence."
Minister Mandiwanzira had promised to comment on the issue on Tuesday last week but he was neither picking his phone nor returning calls made during the course of the week.
The EC is on record saying it is keen to sell its stake but only "at the right price".
In a recent interview, some EC shareholders confirmed knowing about the acquisition of Telecel Zimbabwe by Government and said they were amenable to selling their 40 percent stake.
One of the shareholders said the EC would not mind working with the new majority shareholder, especially considering that they are "from the same country with them".
Telecel has been enmeshed in controversy since establishment.
Early this year, Government cancelled Telecel's operating licence after it failed to regularise its shareholding structure in sync with the dictates of the Indigenisation and Economic Empowerment Act which calls for 51/49 percent ownership in favour of locals.
The mobile phone operators had also failed to renew its licence but got a temporary reprieve after the High Court suspended the cancellation pending finalisation of its legal battle with Government.
Telecel then paid a US$5 million instalment in June as part of the US$137.5 million for the licence.
Shareholder wrangles have also ravaged the EC since 1998, largely centering on who held what percentage of shares following massive reorganisations that have taken place from company formation.
Telecel is Zimbabwe's third largest mobile telecoms firm with over 2.5 million subscribers.
Government already owns another mobile phone company – NetOne – which has about 3.3 million subscribers.
Source - sundaymail
