RUSSIAN businessmen are in talks with state-owned telecommunications companies, Net*One and Tel*One, to form a parallel telecoms firm that will operate fixed and cellular telephone services in Zimbabwe, it has emerged.
Sources said a Russi
an business delegation from the country’s state foreign trade company, Tyazhpromexport, that was in Zimbabwe last month, met Net*One and Tel*One officials for talks on a possible US$300 million investment proposal which would see a new telecoms company formed.
The company would be jointly owned by Tyazhpromexport, Net*One and Tel*One.
Gono’s 12-member delegation undertook a 10-day trip to Moscow early last month to explore business opportunities.
Gono was accompanied by Transport minister Chris Mushohwe, Net*One boss Reward Kangai, and Tel*One CEO Wellington Makamure who were seeking technical partnership agreements and loans.
Although government has tried to distance itself from the deal, it recently ordered Russian planes for Air Zimbabwe, which the national airline engineers resisted on technical and safety grounds.
The Russians made presentations on their proposals at Tel*One’s Runhare House headquarters on May 11 and then at the Net*One building. They proposed to contribute capital amounting to US$300 million on condition that they become the majority shareholders, while the government telecoms firms would bring other resources such as infrastructure and personnel into the venture.
The presentations were made in the presence of officials from the Transport ministry and the State Enterprises Restructuring Agency (Sera).
Sources said ministry and Sera officials had misgivings about the Russian proposal for legal and policy reasons.
They said government policy did not allow local telecoms companies to be foreign-controlled. They also said it was not possible at the moment to guarantee that Net*One and Tel*One’s licences could be used by a new company because the law does not allow for that.
The Russians are expected back in the country this month to pursue discussions, although the deal appears to have hit a brick wall.
Sources said the Russians did not want to invest directly in Net*One and Tel*One because the two companies were debt-ridden.
Tel*One is reeling under a US$350 million debt to foreign telecoms companies. It is heavily indebted to British Telecom, South Africa’s Telkom, the African Development Bank, Netherlands’ ING-Bank, France’s Banque Nationale de Paris, Kredittanstalt fur Wiederaufbau of Germany, Norway’s Eksportfinans, Overseas Economic Cooperation, Itochu-D and Eximbank of Japan, the Bank of China and the African Banking Corporation.
This makes Tel*One all but bankrupt as the debt outstrips its balance sheet, assets and monthly income of $100 billion.
Analysts have also warned that the Russian initiative could be frustrated by restrictive Zimbabwean investment laws.
The sources said the Russians were expected back in the country early this month to finalise the deal and possibly sign a Memorandum of Understanding.
Tel*One public relations executive Phil Chingwaru could neither confirm nor deny the Russian proposal.
“Government would be better placed to answer those questions since it is our sole shareholder,” he said.