THE decision by government to invest in Telecel Zimbabwe where it now has a 60% controlling stake was done in order to resolve shareholder conflicts in the company as well as to empower Zimbabweans, an official has said.
Giving oral evidence before the Media, Information, Communication and Technology (ICT) portfolio committee on Thursday, ICT minister Supa Mandiwanzira said government’s decision to purchase Telecel Zimbabwe was mainly influenced by shareholder conflicts which led to the selling of shares without government benefiting.
Mandiwanzira said the decision was not a decision made entirely by the Ministry of ICT but by the entire government as it was approved by cabinet.
Mandiwanzira said the manner in which Telecel Zimbabwe shares were exchanging hands without the government’s knowledge was a disadvantage to Zimbabwe.
“There were lot of issues around Telecel Zimbabwe, issues of conflict among shareholders but more importantly from a government point of view, issues around the movement of shareholding in this company without any particular benefit to the government of Zimbabwe. There was no benefit in terms of capital gains or having part of those proceeds trickle down to some enterprises locally,” said Mandiwanzira.
He said international shareholding of Telecel Zimbabwe exchanged hands without any benefit accruing to treasury or accruing to businesses that exist in Zimbabwe.
“The company you will know from history was granted a licence on the basis of empowerment. Granted simply because of to simply empower Zimbabwe National Liberation War Veterans association, Zimbabwe Farmers Union, Small Scale Miners Association of Zimbabwe, Indigenous Business Women Organisation, Affirmative Action Group and individuals who were also involved in the transaction,” Mandiwanzira said.
“Originally the shareholding was that 60% would be owned by an entity called Empowerment Corporation which was an entity housing all Zimbabwean shareholders to the business and 40% was to be taken up by an investor internationally who would bring in the technology as well as the technical knowhow of setting up a mobile network. What ultimately happened is that a company owned by the late Rwandese Miko Rwayitare Telecel International ended up snapping 40% of that shareholding and a further 20% to make it 60%.”
Mandiwanzira said his ministry does not know how Rwayitare ended up with an extra 20%. He said the matter was a subject of debate and accusations and counter accusations between the original shareholders of Telecel in Zimbabwe (the indigenous shareholders) and Rwayitare’s Telecel International.
Telecel International, Mandiwanzira explained, ended up selling its entire 60% offshore without the involvement of Zimbabwean authorities to a company in Egypt called Orascom which is owned by billionaire Egyptian business people who ultimately also sold their stake in Telecel Zimbabwe offshore as well.
“The exchange of hands in the shareholding was done with no involvement of the Zimbabwean government, tax authorities and financial systems. The 60% shares were eventually then sold offshore by Orascom to Vimplecom a global company which is largely owned by Russians and by the Norwegian government through their Sovereign Wealth fund which has investments in a company called Telenor.”
Mandiwanzira said when government was tipped that Vimplecom was in the market trying to dispose the shareholding offshore to another foreign company, it decided to buy the shares.
“I had just been appointed minister of ICT and I raised a flag and said we have to come to a situation where if an asset is owned locally and is exchanging hands that process must involve Zimbabweans to the extent of either being offered some of the shares to purchase or the transaction must be recognised by the central bank here and also by the tax authorities. When selling a Zimbabwean asset there must be capital gains accrued in the disposal of that asset,” he further explained.
The Zimbabwean government through Zarnet eventually purchased the 60% stake from Vimplecom for US$40 million. The deal was concluded in July 2017.
Mandiwanzira said Vimplecom explained to government that it was selling its shares due to unresolved conflicts with local shareholders in Telecel Zimbabwe. He said, according to Vimplecom, the local shareholders in Telecel Zimbabwe wanted Vimplecom to continue pouring in funds even though the company was not performing.
Asked why government bought a loss making company which is failing to pay licence fees, Mandiwanzira said government wanted to preserve jobs and empower its people. He said it was a common practice with other governments internationally.
He said Telecel Zimbabwe would remain a private company and will not be turned into a parastatal. Mandiwanzira said his Ministry had been approached by international companies from different countries which include Dubai and South Africa and are interested in buying off Telecel.