HomeBusiness DigestZARNet to buy back Telecel in three years

ZARNet to buy back Telecel in three years

The National Social Security Authority (NSSA) is in negotiations with ZARNet over Telecel Zimbabwe after the former facilitated the acquisition of a 60% shareholding in the country’s third largest mobile operator.

BY BUSINESS REPORTER

NSSA facilitated the acquisition of 100% equity in Telecel International, which owned 60% of Telecel Zimbabwe, by ZARnet.

The acquisition, which was completed last year, was through a transfer of rights and a buy-back agreement in February 2016 and achieved through a mezzanine structure valued at $30 million, NSSA board chairman Robin Vela has said.

In a fourth quarter 2016 update, Vela said the advanced negotiations were in relation restructuring the transaction.

“The two parties are in advanced negotiations in relation to restructuring the transaction; wherein from a NSSA perspective it will culminate in an acceptable equity return and enhanced security arrangements, whilst the ZARNet perspective translates to a feasible and favourable financing structure,” he said.

“The effect of the new dispensation is that ZARNet will exercise the buy-back over a three-year period on terms enshrined in a new agreement involving a number of related-parties to ZARNet.”

The acquisition of 60% shareholding in Telecel Zimbabwe leaves government with a stranglehold over the telecoms sector, as it already owns another mobile operator, NetOne.

However, Telecel and NetOne trail Econet Wireless Zimbabwe in terms of subscriber market share.

According to a second quarter report by the Postal and Telecommunications Regulatory Authority of Zimbabwe, Telecel was the third largest mobile operator, with a 13,7% market share behind Econet (51,6%) and NetOne (34,7%).

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