RWANDA GOVERNMENT SOFTENS ITS ATTITUDE TO TERRACOM SHARE DEAL
Details emerging from two weeks of talks between the Rwandan government and executives of Terracom Communications over the transfer of Rwandatel shares to a third party firm show a softened stance over the deal.Terracom is the company that last year acquired a 99% controlling stake in Rwandatel, the country's sole provider of fixed lines for years at a price of US$20m.
Late last month, Terracom attempted to trade its stake in Rwandatel to a Swiss-based GV Telecom, owned by business tycoon, Miko Rwayitare in a share-swap arrangement. But the government swiftly denounced the deal and declared it 'null and void' because backdoor tactics may have been used since government officials were not informed about it.
Eng. Albert Butare, the communications state minister, said the government had a Share Retention Agreement (SRA) with Terracom that binds it (government) to retain Rwandatel shares if the buyer fails to fulfill obligations spelt out in the Share Purchase Agreement (SPA). A clause in the share retention agreement says no change or transfer of shares may take place until all the obligations have been completed.
President Paul Kagame later added his voice to the issue when he told reporters that the company could only be disposed off by following the terms stipulated in the contracts with Terracom.
Last week though, sources close to the negotiations told Business Week the government had now agreed to a suggestion that Terracom offers a 25% stake to Miko's GV Telecom.
"The man (Miko) is interested to invest in the telecom sector but those issues will be tabled and discussed before the Cabinet soon on return from recess," the source said. Officials contacted by Business Week have since been quite cautious, preferring to avoid the issue. The director of the Rwanda Utility Regulation Agency (RURA) Francois Zimurinda, said he would only comment after negotiations with government are complete.
Terracom's chief executive, Greg Wylar, reportedly traveled to South Africa a fortnight ago, apparently to present the offer to businessman, Miko.
East African Business Week