RWANDA GOVERNMENT DECLARES TERRACOM DEAL “NULL AND VOID”

Telecoms

The Rwanda Government last week declared the recent swap deal between Terracom Sarl and GV Telecel null and void, arguing that the deal was not conducted in proper legal terms. State Minister for Energy Eng. Albert Butare said that the swap is not binding because Terracom breached the terms in the sale contract.

"As far as we are concerned, Terracom is bound by the share pledge agreement and it is very clear. Since Terracom never sought government intervention in the affair, the purported transfer is null and void," Butare said at a live press conference that was also attended by Mannaseh Twahirwa, the Executive Secretary of the Privatisation Secretariat and Francis Zimurinda, the Director General of the Rwanda Utility Regulatory Agency.

In a move to ensure better, affordable and quality communications services in the country, government on October 14, 2005 officially signed the transfer of her 99% shares in Rwandatel to Terracom Sarl. The development followed a transfer document signed June 16, 2005 between the then Minister of Finance and Economic Planning, Donald Kaberuka, and Greg Wyler, the Chief Executive Officer of Terracom.

According to the minister, the Rwandatel Sale and Retention Agreement clearly stipulated that Terracom would effectively take over the 99 per cent shares only if it had succeeded in providing the country with the state of the art technology commensurate with the country's Vision 2020 as well as paying the full amount of the USD20 million it bought Rwandatel. Terracom has so far only paid US$5 million.

Eng. Butare further asserted that the government has not been formally informed of the swap deal. "Apart from reading about the swap in the papers, we haven't been formally informed about it and we are party to the contract. This deal therefore has no legal effect and that's all," he said and, as if to clear the air, the minister added: "As far as government is concerned, Terracom Sarl will continue to run and manage Rwandatel."

Asked whether government, through the Privatization Secretariat, was not to blame for the mess that involved a company (Terracom) without previous experience in the telecommunication business, the minister was non-committal. "It could have happened," he said.

But Twahirwa observed that the Privatisation Secretariat didn't pursue the matter, arguing that Terracom was a Rwandan registered company that had shown competence.

"We didn't need extra information; the technical bid from Terracom was better compared to the other three bidders and we considered them. Besides, the company was here and on ground," he said.

Contacted for comment yesterday, the Terracom CEO Garry Wyler said he would respond to the Butare's remarks.

"I haven't seen a transcript of the Minister's remarks so I can't comment now; I will respond to the matter tomorrow. But all I can say is that its not a takeover but a share swap and that's why it has confused people," Wyler said on phone. He further said that Miko Rwayitare, the proprietor of GV Telecel had met with Terracom senior staff to explain the share swap deal. With Terracom signing a swap deal, some pundits had questioned the authenticity of the whole issue given the fact that GV Telecel initially lost the Rwandatel deal to Terracom during the bidding process.

"Doesn't it beat logic for a winning company to swap with the company that lost to it? Could it be that the bidding process was fraudulent? It leaves some questions unanswered," a senior government official who preferred to remain anonymous, wondered.

According to sources, GV Telecel's proprietor Miko Rwayitare has on several occasions tried to acquire Rwandatel in vain. He is the current proprietor of the four star Hotel des Mille Collines, which he bought for US$3.2million (approx. Frw1.8billion) in August last year. Last month, Focus, a bi-weekly local English paper described Terracom as a briefcase company, stating that it had acquired Rwandatel by fraudulent means.

The paper reported that Greg Wyler, the Chief Executive Officer of Terracom, of using his relationship with the top officials in the country to land the Rwandatel deal, but Butare urged people not to consider such claims seriously.

"He can say anything and people should not be taken up by what he says. What is true is that his company's bid emerged the better of all the other bidders," the minister said of Wyler's statements.

The New Times