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Telecel Zimbabwe scrambles to avoid licence cancellation

By , Journalist
Zimbabwe , 30 Apr 2015

Telecel Zimbabwe scrambles to avoid licence cancellation

Executives at Telecel Zimbabwe and Telecel Globe were on Thursday scrambling for a way out of the cancellation of the Zimbabwean subsidiary's operating licence, ITWeb Africa has established.

Executives and shareholders at the company - which has 2.5 million subscribers in Zimbabwe - are lobbying for reversal of the cancellation.

On Wednesday, the Posts and Telecommunications Regulatory Authority of Zimbabwe (Potraz) said it was giving the company's current subscribers 30 days to switch over to either Econet Wireless or state run NetOne.

"It's now beyond the company level; the board and shareholders of Telecel Zimbabwe have taken the issue up and are trying by all means to find a solution to this issue," said an executive at the company on Thursday morning.

Telecommunications industry and government sources in Zimbabwe have since told ITWeb Africa that going back on the decision to cancel Telecel Zimbabwe's licence would require upfront payment and immediate compliance with the country's indigenisation policy.

Informed authorities said the company needed to pay up its licence fee in full and resolve to give away majority shares into the hands of black Zimbabweans "first before they can approach the minister for leniency" on the cancellation.

Zimbabwe requires that all foreign companies own no more than 49% shares in local companies. Telecel Globe owns more than 50% of Telecel Zimbabwe while the remainder is owned by a consortium of Zimbabwean businessmen under the Empowerment Corporation vehicle.

Even then, the Telecel Zimbabwe minority shareholders have also been locked in bitter disputes over the control of the 40% stake in the company.

"There was leniency on the part of government over a long time. This is a cancellation that should have been acted upon long back but the company failed to put forward tangible plans on how it will pay the licence fee in full and also comply with empowerment laws; the company was dragging its feet on the issues," said a government source.

According to a statement from Potraz, Telecel Zimbabwe now has to decommission its equipment in the next two months.

"During this period, it is expected that Telecel Zimbabwe subscribers switch to alternative networks and those with credits on the Telecash Mobile money platform would make good their position," said Potraz.

However, Telecel Zimbabwe said yesterday evening that it would fight the decision by the government, saying the measure was "unfair and unwarranted". It said it had made "every effort to comply with all legal and governmental requirements" in Zimbabwe.

"Telecel and its global shareholders are taking immediate action both locally and internationally to challenge this decision," the company said in a statement late on Wednesday.

Analysts said the cancellation of Telecel Zimbabwe's licence over non-compliance with indigenisation policies would send the wrong signal to international investors. The policy, first promulgated in 2007, has nerved investors, most of whom have responded by adopting a wait and see signal, said fund managers.

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