Zimbabwe declines to renew Telecel licence

Posted on Jul 19 2013 - 10:31am by admin

By Michael Malakata

The Zimbabwean government has declined to renew the operating license of Telecel Zimbabwe, the country’s second-largest mobile operator, for allegedly refusing to abide by the country’s foreign ownership law. 

Telecel Zimbabwe

Telecel Zimbabwe

The so-called indigenization law requires all foreign-owned companies to cede 51 percent of their shareholdings

Telecel Zimbabwe is 60 percent owned by Egypt-based Orascom while the rest of the company is owned by a Zimbabwean consortium called the Empowerment Corporation. In turn, Russia’s VimpelCom is a parent company of Orascom.

Telecel is second to Econet Wireless in terms of investment and subscriber numbers, with more than 2.5 million customers.

Telecel’s 15-year license expired in June. The company was given an ultimatum to comply with the country’s so-called indigenization law that requires all foreign-owned companies to cede 51 percent of their shareholdings to indigenous Zimbabweans.

Telecel management is trying to convince the Zimbabwean government to renew the operator’s license. If the Zimbabwean government agrees, the company will be required to pay US$137 million for a new license for a period of 20 years.

The company has over the past few years struggled to keep its operation going in Zimbabwe following differences with the country’s telecom sector regulator.

In 2007 the operator’s license was cancelled by the Post and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) over the company’s shareholding structure, but the cancellation was reversed after the company successfully contested the matter with the Zimbabwean government.

However, VimpelCom is reported to be preparing to sell its stake in Telecel due to the continuing friction with the Zimbabwe government.

“While the indigenization law provides for the 51 percent shareholding, the process itself of giving out the controlling stake to the locals does not make sense to the investors and may be a scare to those planning to invest in the country,” said Edith Mwale, telecom analyst at Africa Center for ICT Development.

Mwale said the Zimbabwean government has since 2011 been looking for an international or regional operator to buy a 49 percent stake in the financially troubled, government-owned operator NetOne, but to no avail because of such laws.

Zimbabwe elections are being held at the end of the month, and President Robert Mugabe, who is seeking re-election, is determined to please voters by allowing them to buy majority shares in foreign-owned companies.

Last week, Telecel said the operator’s shareholders are determined to address the issue of its shareholding structure in Zimbabwe soon. CFOWorld.com

  • Mjmo Tasikwendaba

    Guys lets vote MDC-T and all these laws that are only meant to benefit a few shall be repealed. So i urge all Telecel subscribers to defend your network of choice by voting the MDC-T. Go ahead and tell someone.

  • L.Mango

    what does this mean for the subscriber?

    • Okamtotobi

      It means use your vote wisely

  • tsvangson

    yes, this iz good news, the law has to be followed.

  • maita

    Vote wisely. These who close companies must also be closed.

  • Netara

    Uku ndiko kunonzi kupenga chaiko. How can you honestly be closing down companies in a country with 80% unemployment? Selfish, heartless and insensitive people can only do this kind of thing.

  • Matshuma

    Telecel could be a victim of Zanu paranoia. Ironically telecel uses Red colour as their corporate colour which in Zanu circles can be misinterpreted to translate to a red card or a chinja slur. Very soon it could be on Coca cola. kkkkkkkk

  • Edward Mafirakureva

    They want to fix Makamba & Saviour takes over , ndokubuda bhobho mutsoro/draft. Saviour takes over Telecel zvese kuita service Jezebel wepastate house.Gono hokoyo !

  • Squarebasher

    This is the most idiotic decision of all time and shows how the Government needs leadership renewal.What message are we sending to potential investors?That your business can be taken away from you any time depending on your allegiance or who you offend.

    Mugabe must stop this shameless,paranoia and capricious vindictiveness.If he has personal vendetta or he wants his relatives to takeover Telecel just as they did with Land grabbing then he is worse than Gaddaffi and Saddam combined.They destroyed Shabanie Mine and Ziscosteel ,and the Mugabes enjoy and celebrate when people wallow in poverty so they can throw them food handouts like chickens.Mugabe and his wife and their evil deeds are surely going to rot in hell.

  • New-Zimbabwe

    Apparently this a domino effect which will see Telecel subscribers migrating to Econet, so either way Zanu loses as no one will ever subscribe to a network acquired on mafiso techniques.

  • Dandaro

    May all disadvantaged subscribers vote wisely????

  • YOWE

    iyo Econet zvairi indigenous what has it done for the country who has it empowered besides pay its taxes, levies and spend some money on social responsibilty ???? Doesnt telecel pay its taxes engage in a reasonable amount of corporate social responsibility??? Why then are they targeting it pane kufunga how to improve NetOneHa Zanu Pf is weak!!!!!