Zimbabwe: Telecel defaults on licence payment

Telecoms

Second largest mobile network operator, Telecel Zimbabwe is allegedly in default of its license renewal payment terms it brokered with government last year, potentially prejudicing treasury of critical financial resources needed to finance priority projects, The Zimbabwe Mail has learnt.

Impeccable sources told The Zimbabwe Mail that the mobile operator has already defaulted on its very first payment obligation with only $8m having been paid so far.

“The company has also of late been making representations to government through the parent ICT ministry with a meeting early last week where it purported that its failure to meet its payment obligations is due to blocked funds to the tune of $6m at a local commercial bank, but the government authorities are not interested in that flimsy excuse,” said a source  privy to goings-on at the firm who preferred anonymity.

Sources added that as far as the government was concerned, other operators such as Econet have already paid in full their license fees and as such were literally subsidising defaulters such as Telecel.

Telecel’s next instalment is apparently due for payment in December 2014 and although Telecel argued, during its latest meeting with government officials, that it is geared to meet this obligation as per the agreed payment plan, it is already in default of its very first payment plan that was due almost one year ago.

Pursued for comment, Telecel managing director Angeline Vere dodged a number of questions, but insisted the mobile company had met payments agreed on with government and that the shareholding structure was still under negotiation.

“We stand by the information that we provided to the Parliamentary Committee. Telecel has met the payments terms that were agreed on. A payment instruction was issued to a local bank where Telecel Zimbabwe had funds on deposit more than sufficient to cover the required amount in favour of an account specified by the government.

“The issue of the shareholding is a matter under discussion between Telecel shareholders and the relevant authorities and is being accorded the necessary attention,” she said in a terse email response.

Appearing before a parliamentary portfolio committee last week, Vere told legislators that: “We don’t have any arrears to the regulator.”

Telecel was awarded a new 20 year mobile operating license by the telecommunications regulator, the Postal  and Telecommunications Regulatory and Authority of Zimbabwe (Portraz), mid last year on the condition that it meets its submitted payment plan.

The plan entailed that Telecel staggers the payment of the full licence fee of $137,5 million by first making a $14m initial payment by August 2013.

Sources further maintain that one of the license renewal conditions for Telecel was for it to present an acceptable indigenisation plan before the end of 2013, and to date, this has not materialised.

It is understood that the external shareholders want the local Empowerment Corporation to pay its share of the license fees in accordance with the existing shareholding structure.

Vimpelcom, the external shareholders, have 60% equity in the company while the Empowerment Corporation has 40% in direct breach of the company’s licensing and operating requirements, requiring foreign ownership to be limited to a maximum of 49%.

The sources say the company has also failed to appoint a substantive chief executive officer since the departure of its former chief executive, Francis Mawindi. John Swain, who had been appointed interim MD, was deported twice under unclear circumstances. He is apparently no longer involved in operational issues.

The Zimbabwe Mail is reliably informed that a new chief operating officer was seconded to the company from Amsterdam and is managing the company remotely.