TELECEL Zimbabwe, the country’s second largest mobile company by subscribers, is yet to make payments for the renewal of its telecommunication licence, despite making commitments to do so last year.The Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) renewed Telecel Zimbabwe’s operating licence in August last year after the mobile company made an undertaking that it would make an initial payment of the US$137,5 million-20 year licence before the end of 2013.
The company also pledged to have a local majority shareholder by the end of 2013.
Telecel received its first operating licence in 1998 which was due for renewal in June last year.
Telecel is 60 percent owned by Telecel International while 40 percent is owned by a local consortium, Empowerment Corporation. The shareholding structure is said to contravene the Postal and Telecommunications Act and the Indigenisation and Economic Empowerment Act which require locals to have majority stakes in mobile phone companies.
It is also said to violate the shareholders’ agreement used to secure the licence in 1998, which required the transfer of 20 percent shareholding from Telecel International to the Empowerment Corporation five years from the date of issuance of the licence.
After its licence expired last year, Econet, the largest telecommunications firm by both subscribers and balance sheet, terminated interconnection service with Telecel, arguing that it had an obligation to operate with authorised operators.
The move distabilised Telecel, which then sought government intervention for the restoration of relations with Econet.
Potraz bailed out Telecel in August, saying in a statement: “Having noted the conclusion of negotiations between the Government of Zimbabwe and Telecel Zimbabwe regarding the renewal of Telecel Zimbabwe’s national mobile telecommunication license, the authority hereby advises members of the public that Telecel Zimbabwe’s mobile telecommunication license has been renewed.
“In reaching this decision, the authority, in particular, took note of the commitment made by Telecel Zimbabwe Limited to comply with the requirement to have a local majority shareholding, in line with Section 36 of the Postal and Telecommunications Act, the Indigenisation Act and the Telecel shareholding agreement”.
Potraz public affairs manager, Sibonginkosi Muteyiwa, referred all questions to the Ministry of Information, Communication Technology and Postal and Courier Services.
The Ministry’s permanent secretary, Samuel Kundishora, admitted that Telecel had failed to meet its payment obligations for the licence renewal.
“It is important for telecommunication players to commit themselves to what would have been agreed by both parties. Something has to be done.
“On the other hand you do not want to inconvenience people by switching them off or having their competitors complaining,” Kundishora said.
Telecel Zimbabwe communications and branding director, Obert Mandimika, could not say much on the issue, saying the company was working tirelessly to ensure that it complies with all requirements as soon as possible.
The Finacial Gazette’s Companies & Markets understands that Telecel had approached Potraz to pay the US$137,5 million in installments but failed to do so during the last quarter of 2013.
“Unlike Econet Wireless we could not pay the required amount in full so we opted to make payments in installments which we felt was flexible for us. At the same time we could not put on hold the expansion programmes we were already completing to divert money in this regard,” a senior Telecel Zimbabwe official said.
Telecel Zimbabwe is also said to be finalising its indigenisation programme to comply with the law. Orascom Telecom Holdings, the major shareholder through Telecel International, last year injected US$70 million into its Zimbabwean unit, part of which was be used to boost network coverage.
Under the mobile group’s founding structure, shareholder James Makamba and company had roped in the Affirmative Action Group, Jane Mutasa’s Indigenous Business Women’s Organisation, Zimbabwe Small-scale Miners Association and the Zimbabwe National Liberation War Veterans’ Association as part of a broad-based ownership structure.
Last year, Empowerment Corporation appointed President Robert Mugabe’s nephew, Patrick Zhuwao, to spearhead Telecel’s compliance with the indigenisation law.
Zhuwao’s mandate was to specifically ensure that Telecel complies not only with licensing regulations, but also with the indigenisation policy and law of the country.
Zhuwao is also said to have been instrumental in sercuring renewal of the telecommunication licence.