‘Can struggling Telecel be revived?’

14 Apr, 2022 - 00:04 0 Views
‘Can struggling Telecel be revived?’

eBusiness Weekly

Business Writer  

Telecel Zimbabwe, the country’s smallest mobile phone firm, is weighing several “strategic options” to revive the struggling business now characterised with massive shrinking of the subscriber base and financial constraints, Business Weekly can reveal.

“Telecel is going through extremely difficult times,” chairman Selby Hwacha said in an interview. “(We are) burning our minds in trying to think what is the best strategy.”

Several strategy options had been discussed over the past two years and all “remain open until something gets traction,” Hwacha said, highlighting some of the options that include rights issue, equity disposal by shareholders and commercial loans.

Telecel is 60 percent owned by Government while 40 percent is held by a local investment vehicle, Empowerment Corporation (EC), whose main shareholders are James Makamba and Jane Mutasa.

However, the company has for many years been in a destruct mode due to endless squabbles among the shareholders. Apart from Makamba and Mutasa, some individuals and business groupings also emerged claiming to be shareholders, including businessman Dr Phillip Chiyangwa, prominent lawyer Gerald Mlothwa, Zimbabwe Farmers Union, National Miners Association, Indigenous Business Women Organisation and Magamba Echimurenga. Leo Mugabe and Patrick Zhuwao, nephews to the late President Mugabe, were also among prominent figures who once declared to be legitimate shareholders in Telecel.

In 2010, Affirmative Action Group, then led by Supa Mandiwanzira, also demanded equity in Empowerment Corporation, claiming that it was entitled to a share.

Telecel customers have persistently complained about outages disrupting voice call and data services.

Hwacha, however, remains hopeful the situation would turnaround. He maintains Telecel is a very attractive proposition for equity adjustments, joint ventures and lending, and is the least borrowed network “easier to get into a relationship with.”

According to latest figures from the Postal and Regulatory Authority of Zimbabwe (POTRAZ), Telecel has not reported any growth in terms of new customers, with subscriber base remaining flat at about 580 000 last years out of the industry’s 14 million.

Telecel was licensed in 1998. Telecel International (later bought by the Government) had 60 percent, but in terms of licensing conditions which limits foreign ownership in telecoms companies at 49 percent, it was supposed to sell 11 percent to locals, with EC having first right of refusal in five years from the date of issuance.

Failure to regularise the ownership led to a temporary withdrawal of its license by the Postal and Telecommunications Regulatory Authority of Zimbabwe in August 2007.

While several efforts had been pursued to resolve shareholding disputes, it often ended with members at each other’s throat.

For instance, other shareholders accused fellow members of not having paid for the shares when the EC was created, a claim that was dismissed by other shareholders who maintained every member in the Empowerment Corporation got the shares for free.

 

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