Telecel sold for a song

via Telecel sold for a song – DailyNews Live 19 November 2015

HARARE – The cash-strapped Zimbabwean government has acquired a majority stake in Telecel Zimbabwe (Telecel) for a song in a clear sign of foreign investor intimidation.

Telecel’s parent company, VimpelCom Limited, yesterday announced that it had entered into an agreement with government for the disposal of its 60 percent stake in Zimbabwe’s third largest mobile telecommunications company for $40 million.

However, economic analysts said a market evaluation conducted by a reputable audit firm placed Telecel market capitalisation at a little over $200 million.

This is supported by the fact that Economic Empowerment, which owns 40 percent in Telecel, early this year wanted to dispose its shares for $40 million.

The transaction, being handled by an equally bankrupt State-owned Internet services provider Zarnet (Private) Limited (Zarnet) — according to a report on parastatals by Auditor-General Mildred Chiri for the financial year-ended December 31, 2014, has already been described by analysts as a political move.

VimpelCom, which is Netherlands-headquartered, last year put its stake in the mobile operator on the market and received a bid from a foreign investor, but government blocked the transaction on the basis that it had not received any capital gains tax from previous transactions involving Telecel.

In September this year, VimpelCom’s chief group business development and portfolio officer Anton Kudryashov told the Daily News that much as the company wanted to invest more in Zimbabwe and create jobs, the Zanu PF government was frustrating its efforts.

“We don’t feel welcome in Zimbabwe and it’s not good. We want to feel appreciated for what we are doing and we would like to see our licence fully restored,” he said.

This was after government in April this year cancelled Telecel’s operating licence for failing to follow the country’s indigenisation laws, but was temporarily restored weeks later after the company went to court.

But in a statement posted on the mobile giant’s website, VimpelCom said its 51,9 percent owned subsidiary had entered into an agreement with Zarnet to sell its stake in Telecel International Limited.

“VimpelCom Ltd… a leading international provider of telecommunications services headquartered in Amsterdam, today announced that its 51,9 percent owned subsidiary, Global Telecom Holding S.A.E has entered into an agreement with Zarnet (Private) Limited to sell its stake in Telecel International Limited for  $40 million,” the company said.

The latest announcement comes after reports released last week indicated that local social security body National Social Security Authority (Nssa) was set to front the funds on behalf of Zarnet or be a guarantor for the ISP, as the company lacks financial capacity to front the bid.

Sources say Nssa will — in the event that Zarnet fails to reimburse the pension fund — take over the 60 percent shareholding in the entity.