Telecel to challenge closure

By Paul Nyakazeya

OVER two million subscribers lurched into crisis after government yesterday ordered the smallest mobile telecommunications firm by subscribers, Telecel Zimbabwe, to stop operating after the company failed to pay for its licence.

The company instantly warned it would take “immediate action, both locally and internationally, to challenge this decision”, giving a cue that this could turn into a bruising legal fight for the company to regain its licence.

The move was expected to affect thousands of downstream industries, as well as over 1 000 workers who would be thrown into the streets if the company closes. The development has plunged the southern African nation into further economic crisis at a time when industries are closing left right and centre.

Since the country gained independence in 1980 formal employment has hit record rock bottom levels of less than 10 percent. Fright has gripped both the corporate world and subscribers which Telecel has quickly tried to manage by appealing to people not to panic.

Executives at the telecommunications company said they had a number of service providers who would be affected, the biggest of which would be government-owned PowerTel, which supplies internet related services to the company.

Telecel has also been one of the few corporate taxpayers left in the country after several companies closed down due to an economic meltdown. Government has also been earning significant revenue from interconnection fees from the company, the executives said.

One executive said there was already jostling among subscribers who had cash in their Telecash accounts as news of the government’s directive started filtering into the public yesterday evening. Telecash is a mobile payment and banking solution that enables Telecel customers to save money or send and receive money.

Indications are that there are currently over one million Telecash customers among its subscribers. The mobile bank could be holding millions of dollars for customers.

One executive said they had witnessed “irregular withdrawals” by sunset yesterday as customers scurried to withdraw their money, fearing losses as a result of the decision to close the company.

He expected Telecash agents, who number close to 5 000, to be overwhelmed with customers today as they tried to withdraw their money from the Telecash service, a form of mobile banking that had become common among risk-averse Zimbabweans.

Telecel has failed to pay US$137,5 million fee for a 20-year licence. In its announcement yesterday, the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) said it had given the company a 30 day special licence to facilitate the smooth closure of the network to minimise disruption to subscribers.

Telecel is the smallest mobile telecommunication in the country with about 2,4 million subscribers, employing about 1 000 workers directly and indirectly. Several contract workers said they had yesterday been informed that their contracts had been terminated. It was not immediately clear if this was related to the licence cancellation or not.

“I am already winding up my papers to get my payments. I hope I will get the money,” said one contract worker who was recruited to market Telecash products.

Telecel is alleged to have breached local empowerment regulations and failed to pay its licence fees upon which Cabinet last month instituted a committee to investigate the company’s problems and make recommendations. Potraz said it had given Telecel another 60 days after switching off to decommission their equipment.

“In order to facilitate the smooth switch off of the Telecel Zimbabwe network as well as ensuring that disruption is minimised, Potraz concurrently issued a special licence to Telecel to continue providing telecommunications services for a period of 30 days,” said Potraz.

During this period, it is expected that Telecel subscribers will switch to alternative networks and those with credits on the Telecash mobile money platform would make good their position.

“It should be underlined that the telecommunication equipment remains Telecel Zimbabwe’s property. It is up to Telecel Zimbabwe to decide what to do with the equipment,” Potraz said.

However, in terms of Section 96 of the Postal and Telecommunications Act, Telecel may appeal to the Minister of ICT, Postal and Courier Services should they be aggrieved by Potraz’s decision on this matter.

Telecel said the measure by Potraz was “unfair and unwarranted”.

“Telecel has made every effort to comply with all legal and governmental requirements in Zimbabwe, and objects to this treatment in the strongest terms. Telecel and its global shareholders are taking immediate action both locally and internationally to challenge this decision,” said Telecel in a statement.

Telecel said it would take all possible steps to maintain the full range of its services throughout this process. Financial Gazette