‘Telecel acquisition beneficial to Zim’

‘Telecel acquisition beneficial to Zim’ | The Herald April 12, 2016

Conrad Mwanawashe : Business Reporter

GOVERNMENT will now realise revenue through various taxes and savings on management fees following the localisation of Telecel Zimbabwe’s majority shareholding, Information Communication Technology, Postal and Courier Services Minister Supa Mandiwanzira said. Minister Mandiwanzira was giving oral evidence before the parliamentary portfolio committee on Communication Technology, Postal and Courier Services yesterday.The reason behind the localisation of the majority Telecel Zimbabwe shareholding, Minister Mandiwanzira said, had been informed by the country’s failure to collect revenue from taxes from the disposal of the majority stake in the company on two occasions in the past.

“And these exchanges have happened without any benefit to the fiscus of Zimbabwe. There has not been any capital gains tax paid in, no benefit in terms of liquidity in our own local market. These transactions have been happening outside our borders and yet it is a Zimbabwean market.

“Therefore when Vimplecom who were the majority shareholders were in the market looking at disposing this asset we made it very clear that Government would be interested in making sure that that asset is localised rather than it being sold internationally,” said Minister Mandiwanzira.

“We are proud of this because we bring back to shores an investment that has been traded on the international market without any benefit to Zimbabwe,” he said.

“Telecel is now going to be a Zimbabwean entity. Where they were paying management fees to Switzerland and to Amsterdam, Netherlands where Vimplecom is headquartered, those monies will not be leaving this country. Where Telecel Zimbabwe were paying for the use of the name Telecel, those fees will no longer be leaving the country because that name is now owned in Zimbabwe. So we are saving money that was being channeled out of Zimbabwe,” said Minister Mandiwanzira.

Another reason why Government decided to take the majority of the shareholding is that until now, Telecel Zimbabwe was in breach of the Postal and Telecommunications Act which requires that 51 percent of any entity it licences must be owned by locals.

“So for many years Telecel Zimbabwe has not complied with our laws and that also motivated the purchase of the 60 percent by the local company (Zarnet),” said Minister Mandiwanzira.

The Minister said there will be a major saving on localising management fees. Government will also most likely receive the outstanding $105 million license fees.

Minister Mandiwanzira said Government has now concluded the purchase of the mobile network provider.

“I wish to confirm that the Government of Zimbabwe through (the Zimbabwe Academic and Research Network) Zarnet entered into an agreement for the purchase of the 60 percent shareholding of Telecel Zimbabwe which is held by Telecel International which in turn is owned by global Telecom Holdings, a subsidiary of Vimplecom. The purchase price for the 60 percent was negotiated at $40 million and that full amount has been paid,” said Minister Mandiwanzira.

Zarnet was birthed through the Research act of 1986, under the Research Council of Zimbabwe to provide Internet and ICT services to the academic and research sector which include kindergarten schools, primary schools, secondary schools, vocational training colleges, university, tertiary colleges, research Institutions, government institutions, and affiliate institutions.

He said the transaction was concluded after the purchase price was paid with some of the money partly being remitted to Vimplecom, the former shareholder’s escrow account which is domiciled overseas.

The other part of the money has been paid locally to Vimplecom’s designated local bank accounts in Zimbabwe. What is now needed is the finalisation of the remittances.

“However some of the funds are still in Zimbabwe because of issues relating to liquidity for funding Nostro accounts.