The Zimbabwe government has completed acquisition of a majority stake in the country's second largest telecom operator, Telecel Zimbabwe for $40 million from VimpelCom, heralding the state's dominance in the Southern African country's crucial and fast developing industry.

The acquisition follows months of intense disagreement and regulatory hurdles for VimpelCom, which has been accused of failing to comply with payment for licence renewal fees and with the country's controversial empowerment policy.

The law requires that foreign owned companies give majority shares to black Zimbabwean groups.

VimpelCom owned a 60% stake in Telecel Zimbabwe through Global Telecom while the remaining 40% was held by a consortium of local businessmen, among them exiled James Makamba.

Indications now are that the government may make a move for some of the remaining minority shares in Telecel Zimbabwe.

A statement by VimpelCom on Wednesday morning read "its 51.9% owned subsidiary, Global Telecom Holding S.A.E. ("GTH"), has entered into an agreement with ZARNet (Private) Limited to sell its stake in Telecel International Limited for $40 million."

Local ICT firm Zarnet is being revamped to play a key role in the country's technology landscape.

The government already controls fixed phone operator, TelOne and mobile operator, NetOne while Econet Wireless is now the sole major private operator in the industry.

ITWeb Africa reported yesterday that the deal was inching towards finalisation. Telecel Zimbabwe has just below 3 million subscribers on its network and about 1 million registered mobile money users.

"Transfer of ownership to ZARNet will occur after customary conditions are satisfied," said VimpelCom.

The deal is likely to sail through, officials in Zimbabwe said on Wednesday, highlighting that it would not be difficult to get competition and regulatory approvals for the deal since the government was involved in the acquisition.