Zimbabwe: Telecel Keen to Localise Shareholding

Mergers, Acquisitions and Financial Results

Telecel board chairman Dr James Makamba says the country's fastest growing mobile phone operator's shareholders are determined to address the shareholding structure that has raised eyebrows among empowerment groups as it is skewed in favour of foreigners instead of locals. The company's majority stake -- 60 percent -- is held by Egypt- headquartered Orascom Telecom while Dr Makamba, together with deposed former chairperson Dr Jane Mutasa, hold 40 percent shares through the Empowerment Corporation.

Major shareholders in the Empowerment Corporation are Dr Mutasa, through Selpon Investments and Dr Makamba's Kestrel Corporation.

Telecel has had serious brushes with the Postal and Telecommunications Regulatory of Zimbabwe over the current shareholding structure.

However, in an exclusive interview from his base, Dr Makamba said shareholders were keen to align the structure with local laws.

"All Telecel shareholders agree that there is need to comply with the laws of the land and will do everything possible to meet the requirements.

"A lot is happening behind the scenes to resolve this and an announcement will be made at the appropriate time," said Dr Makamba.

As a result of the shareholding structure that favours foreigners, there are allegations that the local Telecel management team cannot make any purchases beyond US$25 000 without consulting the headquarters.

Dr Makamba confirmed that indeed there were situations that warrant the express authority of the major shareholders before any purchases are made.

"Telecel Zimbabwe has an internal procurement committee that sits every week to evaluate POs (procurement orders) and this body is the one that makes such decisions.

"Of course, there are cases where, because of the nature of the equipment being procured, Telecel might need to consult Cairo (Egypt) especially if the supplier is an international one who has a supply agreement at group level.

"Such cases are treated as an exception rather than as a norm," said Dr Makamba.

Meanwhile, Dr Makamba said Telecel backs the idea of infrastructure sharing that is being advocated for by Potraz since it enables mobile phone operators to cut costs and potentially pass on the benefits to subscribers.

"We have always supported this initiative even before it was proposed by the regulator. For us, it makes sense to cut costs by sharing infrastructure and passing any savings back to the subscriber through lower tariffs for services," he said.