Libyan Telco in Final Lap of Race for 75 Percent Stake in Zamtel
LAP Green Network, which owns 62 per cent of Uganda Telecom Ltd, is planning to make the final plunge to obtain a stake in Zamtel, the Zambian government-owned telecom operator.
LAP Green is one of four companies - along with Angola's Unitel/Angola Cables, Russia's Altimo Holdings/VimpelCom and Bharat Sanchar Nigam of India - that have reached the final bidding stage to take 75 per cent of the struggling operator, which is badly in need of recapitalisation.
The government is seeking to offload the company "by the end of the first quarter" of the year, after the company's failure to live with big boys Zain who, at 2.3 million (75 per cent of market share) dominate the industry, and the other operator MTN, which has quickly overtaken Zamtel's figure of 200,000 subscribers.
On top of this, Zamtel's balance sheet is a worry; the company is heavily indebted to the tune of $125 million, carries an annual operating deficit of $17 million and has an unsettled workforce that is wary of losing jobs once the company is privatised.
These liabilities might turn out to be a thorny issue for the new owners to offset, but LAP Green chief commercial officer Hans Paulsen says the company is not worried by this.
Mr Paulsen told The East-African that LAP Green is after Zamtel's potential rather than its indebtedness.
"We know it's indebted, but those things can be sorted out."
LAP Green recently bought 80 per cent of Southern Sudan operator Gemtel for a yet to be disclosed amount.
The firm is backed by the Libyan government through its investment arm Libyan African Investment Portfolio.
The company's telecom interests include controlling stakes in Uganda Telecom and Rwandatel of Rwanda, as well as a 60 per cent stake in Sonitel and Sahelcom of Niger and Cote D'Ivoire and Ambitel GreenN of Sierra Leone.
Late last year, the Libyans signed a $300 million financing agreement with the Industrial and Commercial Bank of China to fund their investments, but officials also suggest that up to $5 billion is available for LAP Green to acquire and finance more operations that will bring it at par with the continent's telecom giants.
This is a tall order for a group whose total subscriber numbers stand at a measly 4.5 million, compared with more than 100 million for MTN, Zain's 70 million or even Vodacom's 36 million.
In terms of growing its subscriber base across the continent, Zamtel does not present a quick fix for LAP Green.
But as a business model, it fits in well with LAP Green's other operations.
For instance, its flagship operation Uganda Telecom has less than three million subscribers - it trails MTN and Zain in mobile subscriber numbers but it remains the market leader in the landlines, Internet and data market, products where Zamtel also has an edge over its competitors - in fact, Zamtel has a monopoly on fixed lines and international gateway.
This monopoly has frustrated other operators in pursuit of growing Internet, fixed lines and access to the international gateway.
Zambia's mobile penetration remains at 33 per cent in a population of 12.2 million people.
The East African