Telecel legal battle looms

A LEGAL battle is looming over the Telecel Zimbabwe acquisition saga following Attorney-General (AG) Prince Machaya’s siding with state-owned information and communications technology (ICT) firm Zarnet in its fight with the National Social Security Authority (Nssa) for the control of the country’s third largest telecommunications company.

By Elias Mambo

Telecel
Telecel

The AG’s office got involved in the wrangle after Nssa threatened to withdraw the US$40 million it used to facilitate the acquisition of Telecel Zimbabwe from international telecoms giant VimpelCom, on behalf of Zarnet.

Machaya told Nssa through its lawyers MawereSibanda Commercial Lawyers that government was not happy with its confrontational attitude in its push to control Telecel, insisting the social security company was just a financier.

The Zimbabwe Independent, however, understands Nssa and its lawyers do not agree with the AG’s views, setting the stage for a potential legal battle.

Nssa has been battling Zarnet for the control of Telecel since financing the deal.

Government, through Zarnet, last year entered into a sale and purchase agreement of Telecel with Global Telecom Holding, a unit of VimpelCom. The agreement was that Zarnet would pay the US$40 million on terms.

Zarnet was to acquire 100% shareholding in Telecel International Ltd which in turn owns 60% of Telecel Zimbabwe.

Zarnet structured the deal and engaged Nssa to raise US$40 million for the acquisition of the 60% stake in Telecel.

However, Nssa has been making moves to control Telecel putting it on a collision course with Zarnet.

Sources said the ICT company approached Machaya’s office after Nssa threatened to withdraw its funds. Machaya then wrote a letter to Nssa informing the social security company that the acquisition of Telecel, through Zarnet, was a cabinet decision.

“In case you may not be aware of the genesis of the Telecel issue, we wish to advise you that cabinet, on behalf of government, made a decision that government was to acquire Telecel,” the AG’s Office wrote to Nssa lawyers Mawere-Sibanda on August 19.

“Government thereafter decided to use the vehicle of an entity which it owns in the form of Zarnet to make the acquisition. Against that background you will appreciate that it is not possible for government to act in bad faith against your client.

“Against that background you will appreciate that it is not possible for government to act in bad faith against your client.”

Nssa had written to Zarnet indicating that it wanted overall control of Telecel when the mobile service provider is transferred into the hands of the Zimbabwe government on September 30.

Zarnet, however, protested, saying it invited Nssa to provide funding only.

“The two agreements in question were entered into in a spirit of cooperation and with mutual desire to give effect to the resolution of cabinet to acquire the business of Telecel,” said the AG.

“Your client should, therefore, remain focussed on this overriding objective.”