Telecel closure: Zanu PF double standards exposed

via Telecel closure: Zanu PF double standards exposed – DailyNews Live 11 May 2015

HARARE – Telecel Zimbabwe (Telecel) licence cancellation by the country’s telecommunication regulator smacks of hypocrisy and Zanu PF-led government’s double standards when dealing with perceived political enemies, critics say.

Those in the know claim that the decision by the Postal and Telecommunication Regulatory Authority of Zimbabwe (Potraz) to cancel Telecel’s licence — without giving any reasons — was long coming following the demise of former Vice President Joice Mujuru.

Mujuru was the Information, Posts and Telecommunications minister when Telecel got its licence, and her late husband, Solomon, was a close business associate of its chairman, James Makamba.

Political commentator Alex Magaisa said following the ouster of Mujuru from government and Zanu PF, it was now time for some hawks in the ruling party to make cash by allowing another new player into the telecommunications industry.

“And through all this, some big boys will be eating. Some big people may have been eating through Telecel. Now they are being elbowed out and some more big people are sensing their opportunity. It’s their turn to eat,” he said.

“If you ask them, they will tell you it’s the law. It is the law, alright. But it is more than that,” added Magaisa.

This could turn out to be true if Telecel’s assertion is correct that VimpelCom — Telecel’s parent company — offered to cede 11 percent of its shareholding to comply with the country’s indigenisation regulations.

Netherlands-headquartered VimpelCom, which owns 60 percent of Telecel through its Cairo-based unit Orascom, has so far invested over $300 million on its local unit.

“Telecel has done everything possible to ensure full compliance with all the license requirements,” the company said in a letter to employees seen by the Daily News on Sunday.

This comes as Zimbabwe’s third largest mobile telecommunication company — with 2,5 million subscribers — had been working with the government to resolve a dispute after Information Communication Technology minister Supa Mandiwanzira said Telecel hadn’t made licence-fee payments and failed to comply with the nation’s ownership laws.

“We are objecting to this treatment in the strongest terms. Telecel and its global shareholders are taking immediate action both locally and internationally to challenge the decision,” said the company.

There are also indications that the company’s workers’ committee might approach the office of the President for a redress.

Critics also say government’s decision to shut down Telecel, which employs over 1 800 people, goes against the spirit of the economic blueprint — ZimAsset.

The five-year economic blueprint promised to create over 2,2 million jobs, yet to date not a single job has been created.

“I am totally shocked to learn that government is proceeding to shut down Telecel Zimbabwe for allegedly operating without a licence,” said political commentator Farai Maguwu.

“I do not condone lawlessness. But given the stature of Telecel, and the number of people it employs vis-a-vis the extremely high unemployment levels in the country, it defies logic that a whole cabinet approves the closure of a company that is thriving in a very hostile business environment,” he said.

Maguwu said it was clear that government made a hasty decision without looking at the implications on the welfare of the company’s workers and subscribers.

“Was the unfortunate decision politically motivated, either to deal with certain individuals at Telecel or to create room for rivals who are in the right basket?” he said.

“So, if government wants to play hard and fast with the rules then why is it allowing the Chinese to operate illegally in the mining sector,” added Maguwu.

The cancellation of Telecel’s licence also comes amid reports that Isabel dos Santos, the second female billionaire in Africa, has been eyeing the mobile phone operator in Zimbabwe for some time.

In March this year it was reported that certain political bigwigs in Zimbabwe had been pushing for the ousting of an empowerment outfit led by the exiled Makamba, to smoothen the way for Dos Santos’ eventual takeover of the mobile phone company.

Earlier in the year Brainworks Capital had offered Empowerment Corporation $20 million to acquire 40 percent of the stake held by the group in Telecel.

But the deal collapsed after an urgent court application by the Empowerment Corporation that disputed the valuation of the company.

Barclays Bank Plc valued Telecel at $200 million, which means the empowerment shareholding was worth $73 million and not $20 million.

Empowerment Corporation managing director Patrick Zhuwao blamed continued shareholder wrangles among the consortium’s major shareholders Makamba and Jane Mutasa for the collapse of the Brainwork’s deal.

“The case of Economic Corporation reflects a classic case of the failure of corporate governance such that the continued existence of Economic Corporation as an entity is prejudicial and detrimental to the interests of the shareholders who include ware veterans, farmers, small scale miners and indigenous businesswomen,” he said.

“It is unfortunate that Mr Makamba and Mrs Mutasa are so personally conflicted in the pursuit of their private interests that they failed to protect and safeguard the interests of shareholders,” Zhuwao added.

Since its formation in 1998, Telecel’s minority shareholders that includes — Affirmative Action Group (AAG), Indigenous Business Women Organisation (IBWO), Zimbabwe Farmers Union (ZFU), Zimbabwe Liberation War Veterans Association (ZLWVNA), Zimbabwe (SS) Miners Association, Kestrel Corporation (Private) Limited and Integrated Engineering Group — have been engaged on a protracted power struggle.

Magaisa said government will not completely shut down Telecel’s operations, but will form a joint venture with a new partner.

“Rather, in what has now become a familiar pattern, the bad news of its closure is only a precursor to good news of its rescue,” he said writing on his blog, newzimbabweconstitution.

“Because for sure, there is White Knight waiting in the wings to ‘rescue’ the business, the workers and the customers. And this White Knight is set to gain Telecel’s business on the cheap, now that it does not have a licence and its value has consequently been reduced,” added Magaisa.

The law-lecturer said the broke Zimbabwean government will use the indigenisation mantra to pay for its shareholding in the new joint venture.

“Now, instead of the government forking out cash for shares, they will simply pay by way of a set-off or a debt-equity swap, with the debt owed on the licence fee being used to pay for the shares taken up by Government.

“This will have the added benefit of relieving the new entity from having to pay a large part if not all of the licence fee,” said Magaisa.