Mergers, Acquisitions and Financial Results

Chinese telecoms supplier Huawei Investments has demanded that it be guaranteed a portion of Zimbabwe's minerals and future tobacco produce before it can supply USD160 million worth of telecommunications equipment needed for a second fixed telephone network, it was learnt this week. Huawei also wants a 20 percent hard cash down payment before equipment is delivered and another 40 percent after delivery. The remainder will be paid in cash, tobacco, chrome or platinum once TeleAccess, a private company licensed to operate the telephone network, finished rolling out the project. TeleAccess, owned by ruling Zanu PF party crony, Daniel Shumba, was given the license to set up a fixed telephone network to rival the existing one owned by the government in January 2003. To date the company, which under telecoms regulations was supposed to have finished rolling out the network by last June, has not even begun work on the project. According to sources, TeleAccess's financial advisers, the Commercial Bank of Zimbabwe, last week told Parliament's Portfolio Committee on Transport and Communications that Huawei feared the Zimbabwean firm might not be able to raise hard cash to pay for equipment because of forex shortages in the country.

The bank's managing director, Nyasha Makuvise, is said to have indicated that they were now structuring a deal under which TeleAccess will contract tobacco farmers and mining firms to produce the crop, platinum and chrome which could be exported to generate hard cash to pay the Chinese firm. "Makuvise said the Chinese are very sceptical about TeleAccess' ability to raise enough foreign currency given the shortages being experienced in the country and are not going to supply anything until they are guaranteed the tobacco and minerals," said one source who attended the hearing. Makuvise is also said to have told the parliamentary committee that delays by the Postal and Telecommunications Regulating Authority to allocate frequencies to TeleAccess had at one time also stalled negotiations with Huawei. The Chinese firm wanted confirmation that TeleAccess would be allocated the frequencies before they could commit themselves to supplying equipment. Foreign suppliers wary of the current political and economic crisis in the country now demand cash upfront before delivering goods or services to Zimbabwe. The few international companies still willing to risk supplying Zimbabwe on credit have of late however demanded firm guarantees mostly in the form of tobacco or minerals before releasing goods.

Zimbabwe Online