ZIMBABWE’S prospective second fixed telephone operator, TeleAccess, has turned to contract tobacco farming and mining to raise US$160 million needed to import equipment for its network operation.
TeleAccess, owned by Distinguished Ownership (Pvt) Ltd in which Daniel Shumba is the controlling shareholder, will need earnings from the agricultural and mining sectors as foreign exchange shortages bite in the country.
TeleAccess financial advisor, the Jewel Bank, has contracted tobacco farmers and miners to provide assurance to Chinese firm, Huawei, a potential equipment supplier, that TeleAccess will be able to pay for the equipment in hard currency.
The Chinese supplier has requested TeleAccess to provide security in the form of tobacco, chrome and platinum products before they can supply more than US$160 million worth of telecommunications equipment for the project to take off.
Jewel Bank chief executive Nyasha Makuvise told a parliamentary portfolio committee on Transport and Communications on Monday that farmers would produce the tobacco that would be sold to raise the forex.
Makuvise said potential equipment suppliers were reluctant to accept payment in local currency, which has been depreciating against major currencies.
He said delays in implementing the project had been partly due to changes in the regulatory process and policy shift in the parent ministry had also affected the bank’s efforts to issue a private placement to fund the project.
“The delays have caused implementation costs to shoot up while several negotiations between Potraz and our client have been going on over the period. At the prevailing auction rate of $5 600 per green back, almost $890 billion is required,” Makuvise said.
He said the suppliers, wary of Zimbabwe’s foreign currency shortages, had asked for a share of the country’s tobacco crop.
They also want a share of chrome and platinum earnings as payment for the equipment. Makuvise said the suppliers also wanted other minerals beforethey could de-liver telecommunications equipment for the project and to assure Sinosure, Huawei’s insurance agents, that payment would be in hard currency.
He said the potential suppliers wanted a 20% down payment before delivery and the other 40% after delivery, with the balance payable after the launch.
Makuvise said if the contractual agreements are concluded the company would deliver the “equipment in two to three months”.
Jewel Bank is now structuring a deal in which TeleAccess will contract tobacco farmers to grow the forex-earning crop.
The parliamentary committee was seeking to understand the mystery surrounding the delay in the implementation of the project, which is of significant national interest.
Makuvise said negotiations between the Chinese company and TeleAccess had been stalled by the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz)’s delay in allocating frequencies to TeleAccess and the numbering plan to distinguish between operators.
Makuvise told the parliamentarians that Huawei wanted confirmation from Potraz that TeleAccess would be allocated frequencies and numbers for the service provider.
He said there would be a private placement to raise part of the required funding.
In the fundraising project, the bank was looking for both loans and equity, he said.
TeleAccess was licensed in January 2003 by Potraz to become the second national fixed line telephone operator.
Telecommunications regulations had stipulated that the company was to roll out its network within six months of getting the licence.
The telecommunications company has complained that Potraz had delayed in allocating them numbers for their system.
Makuvise said the rollout would be as soon as the interconnection agreements were signed and the authority approved the numbering plan.
TeleAccess undertook to connect 60 000 lines in its first year of operation.