NSSA pays $7m for Telecel deal

Source: NSSA pays $7m for Telecel deal – DailyNews Live

Ndakaziva Majaka      3 July 2017

HARARE – The pay-as-you-go pension scheme, the National Social Security
Authority (Nssa), received $7 million from government in the second
quarter of the year for facilitating the acquisition of Telecel Zimbabwe
(TZ) by the State-run Internet access provider, Zarnet.

All in all, Nssa will receive $43,3 million from government, which will be
paid in quarterly instalments, over a period of three years.

The State-run pension fund made the decision to exit TZ following
negotiations to restructure the financing deal that saw Zarnet acquire 100
percent equity in Telecel International – which owns 60 percent of TZ –
through a transfer of rights and buy-back agreement.

Nssa chairperson, Robin Vela yesterday, said the exit structure would see
the authority, on a secured basis, being paid $43,3 million in quarterly
instalments over a three-year period with a resultant internal rate of
return of approximately 16 percent.

“The first payment of $7 million was received in the second quarter of
2017,” the Nssa boss said in a statement accompanying the statutory fund’s
financials for the year to December 31, 2016.

Nssa earlier this year announced its intention to relinquish its
controlling stake in TZ to Zarnet after three years.

Zarnet’s acquisition of the TZ stake was achieved through a mezzanine
structure valued at $30 million, provided by Nssa, after government came
up with a $10 million deposit in the $40 million deal.

Marred in controversy, the transaction gives government controlling stake
in the country’s third largest mobile network operator to the little know
government Internet provider, Zarnet.

Reports last year indicated that Nssa was not “entirely happy” about the
prospect of losing out on an equity holding in TZ – 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.

Meanwhile, in the full year to December 2016, Nssa recorded a profit surge
to $105,9 million from $32,1 million recorded in 2015 with general manager
Elizabeth Chitiga attributing this to less write downs and improved

Contributions and premiums also increased by 12 percent from $292,9
million to $327,7 million in 2016.

Contributions alone increased by 14 percent from $242,8 million to $276,5
million while premiums increased by two percent from $50,2 million to
$51,2 million.

“The increase in contributions is attributable to improved collections
arising from stakeholder engagement. This has resulted in voluntary
compliance despite the decline in the number of registered employees from
28 739 to 28 162 due to company closures,” Chitiga said.

In the year under review, investment income increased three percent to
$23,5 million from $22,8 million, attributable to the increased amount
invested in the money market which partly offset the decline in interest

Total claims and benefits were up five percent from $136 million in 2015
to $142,7 million with an aggregate of 187 666 beneficiaries receiving

However despite several cost-cutting measures, the pension fund’s
operating expenses were up 21 percent from $87,6 million to $105,8

“The increase arose from the high credit losses provision of $40,9 million
and bad debts written off of $23,4 million. Excluding these provisions,
impairment losses and unusual items, operating expenses decreased by eight
percent from $39,8 million to $36,3 million in 2016,” Chitiga said.

A loss on valuation of investment properties of $11 million was recorded
down from $87,9 million in 2015 on the back of a $1,7 million loss from an
associate company as Nssa’s assets grew 15 percent to slightly over $1
billion buoyed by improved profits.