Telecel Zimbabwe deal too attractive to pass

Zimbabwe’s state run pension fund, National Social Security Authority (NSSA), yesterday said the chance to buy Vimpelcom’s 60 percent shareholding in Telecel Zimbabwe was too attractive to miss, adding that it paid $30 million for the stake pending the transfer of the cash to the Dutch telecomms giant.

The institution had placed a moratorium on investments pending the appointment of substantive management after a new board had dismissed then general manager James Matiza alongside four other senior executives last October when the Telecel deal became a possibility.

“NSSA paid US$30 million in respect of the acquisition of a 60% equity stake in Telecel Zimbabwe in exchange for an equity participation which the Authority sees as strategic in underpinning its asset base; generation of investment income and delivery of its social security services to its stakeholders. Completion is pending the release of funds to the Seller’s offshore account,” said chairman Robin Vera in a quarterly update.

“The cash-flow generation capacity of Telecel Zimbabwe to supplement NSSA’s investment income; the entry price giving protection of capital value; and the strategic nature of the entity for elements such as offering new social security products and pension payments were too compelling for the Authority to pass over even given the current cash constraints of the Authority.”

Telecel is the country’s smallest mobile telecoms firm with 2.4 million subscribers. The purchase of Telecel was done through ZARNet, an Internet Service Provider (GISP) wholly owned by the government through the Ministry of Information & Communication Technology, Postal and Courier Services.

Vera said the $30 million advanced to ZARnet was not a loan but quasi-equity participation funding which gives the equity control of Telecel Zimbabwe to NSSA until certain conditions are met by ZARNet.

“In all circumstances, NSSA will emerge as a significant equity holder in Telecel Zimbabwe Limited”.

“A formal binding agreement has been signed in relation to the transfer of rights in the (Telecel) shares from ZARNet to NSSA, giving NSSA effective control over 60 percent of Telecel Zimbabwe,” said Vera.

On February 25, the Amsterdam-headquartered telecoms giant VimpelCom disputed a government claim a week earlier that the deal had been concluded. Vera said the conclusion of the purchase Agreement was awaiting the payment offshore of the purchase price which is currently held in a local trust account of a nominated legal firm, reported elsewhere as Honey & Blanckenberg.

Telecel’s remaining 40 percent is owned by Empowerment Corporation, a group of local shareholders who have also approached NSSA to buy their shares, according to Information Communications Technology minister, Supa Mandiwanzira.

NSSA, which has 70 percent of its investments in the equities market, has interests in 53 of the 59 companies listed on the Zimbabwe Stock Exchange, holding at least 10 percent shareholding in 12 counters.- The Source

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