Home » Business » Save Telecel Business [editorial]

GOVERNMENT last week finally asked Telecel Zimbabwe, the smallest of the three local mobile telecommunications firms, to stop operations because of failure to pay for its licence and failure to comply with the indigenisation law.

The development did not come as a surprise since government had earlier indicated that Telecel’s licence had been cancelled but a directive had not yet been issued for the company to stop business.

Yet the latest development was nonetheless shocking, as many had thought government would find ways of keeping the business operational without closing it due to the current economic situation dominated by company closures and unemployment.

Telecel has for nearly two years failed to pay the US$137,5 million fee required for a 20-year licence.

The Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) gave the company a 30 day special licence to facilitate the smooth closure of the network to minimise disruption to subscribers.

Potraz also gave Telecel another 60 days after switching off to decommission its equipment.

Telecel has about 2,4 million subscribers, employing about 1 000 workers directly.

The company also has a number of service providers, the biggest of which is government-owned PowerTel, which supplies internet related services to the company. The company supports a number of other downstream industries, and has over 5 000 agents across the country.

This means that the effect of closing the business will be far and wide, and could have serious ramifications on employment and also on tax for the cash-strapped government.

Indeed Telecel is one of few corporate taxpayers left in the country after several companies closed down due to an economic slowdown.

Government has been earning significant revenue from interconnection fees from the company. The consequences of the current government decision will therefore be dire.

We believe the shareholders of the company are culpable and should surely take full responsibility for the current debacle.

For a long time, the so-called Empowerment Corporation, a consortium of black, politically-connected Zimbabweans, has bickered over shareholding in Telecel, which they jointly own with Telecel Globe, which holds a 60 percent stake in the company. Due to that bickering, Telecel Globe has failed to fulfil its obligations in terms of its operating licence, which required that it should have, about 10 years ago, localised the majority shareholding in the company.

The consortium of black shareholders, who were given the licence by government, have themselves not injected any money into the business, and do not have the capacity to fulfil their obligations in terms of paying for their portion of the US$137,5 million licence fee.

The situation at Telecel, therefore, does not inspire confidence.

But we believe there are innovative ways of ensuring compliance either through roping in a new foreign shareholder to pay the licence fees and allow the business to continue without straying outside the governing statutes.

Zimbabwe cannot afford policy enforcement that will force many more people onto the streets.

Source : Financial Gazette