Connect with us

Support The NewsHawks


Corporate rescue highlights Telecel ownership mess



THE shareholding structure and control of Zimbabwe’s beleaguered third-largest mobile network operator Telecel Zimbabwe is as clear as mud.


Telecel, which has been placed under corporate rescue, was jointly owned by Telecel International, which had 60% shareholding, and Empowerment Corporation, a Zimbabwean consortium made up of a number of local companies and investors who controlled 40% of the company.

Telecel International was, in turn, controlled 100% by Global Telecom Holding (GTH), a VimpelCom subsidiary.

Empowerment Corporation (E Corp), which had a 40% stake and was owned by James Makamba’s Kestrel (23%), IEG (18%), Indigenous Business Women’s Organisation (17%), National Miners’ Association (14%), Zimbabwe Farmers’ Union (14%) and Magamba eChimurenga (14%).

Local tycoon James Makamba was the de facto controller of Telecel.

In 2015, former president Robert Mugabe’s son-in-law Simba Chikore and daughter Bona approached the then minister of Information Communication Technology, Postal and Courier Services, Supa Mandiwanzira, seeking to leverage their powerful family position and influence to take control of Telecel.

At the time, Isabel dos Santos, the daughter of the late Angolan president Eduardo dos Santos, Africa’s richest woman at the time, also wanted to buy Telecel.  Her business empire later crumbled in chaos amid corruption charges, after her father left office.

As part of her business expansion programme, Isabel flew to Zimbabwe below the radar and met former first lady Grace Mugabe to cut the Telecel deal, but that did not go anywhere as local corporate vultures were already circling above the company.

Mugabe stopped Simba and Bona in their tracks.

Various consortiums were jostling for the company, including George Manyere’s investment holding and advisory company Brainworks , a US-based group led by former Telecel chief executive Francis Mawindi, Shingi Mutasa’s London-listed Masawara and a local partnership involving Old Mutual, CBZ and the National Social Security Authority (Nssa) which has a US$1.2 billion balance sheet. Nssa generates surplus contributions in excess of US$10 million per month, which it is authorised to invest.

The consortium comprising Old Mutual, CBZ Bank and Nssa vigorously pushed to take over Telecel Zimbabwe until it was elbowed out by the government.

While various groups were scrambling for the 60% shareholding in Telecel, there are other entities which were battling for the EC’s 40% stake. These included Brainworks and Kingville Investments, which expected to be financed by a New York investment bank.

After the jostle, Nasdaq-listed global telecoms giant VimpelCom sold its majority shareholding in Telecel for US$40 million, reportedly to the government.

The Amsterdam-based telecoms firm in 2016 announced it had entered into an agreement with the Zimbabwean government to sell its 60% stake to a chaotic quasi-government entity, ZARNet.

However, it later turned out that the shares had in fact been bought by Nssa, which is not a parastatal.

At the time, President Emmerson Mnangagwa’s son-in-law Gerald Mlotshwa, who was Makamba’s lawyer and Telecel board director, entered the fray, battling the businessman over Telecel ownership. Both claimed the company.

Telecel Zimbabwe has now been placed under corporate rescue after a High Court plea made by the Communication and Allied Service Workers’ Union of Zimbabwe in October last year triggered the rescue case.

David Mhambare, the union’s secretary-general, had argued the country’s third-largest telecommunications firm was insolvent and faced liquidation if no rescue action was immediately taken.

A notice in the Government Gazette published last week revealed that the corporate rescue proceedings have begun in terms of section 124(2)(b) of the Insolvency Act [Chapter 6:07].

“Notice is hereby given to the shareholders, employees and other creditors of Telecel Zimbabwe (Private) Limited that a court application for the placement of the above-mentioned company under supervision was filed with the High Court of Zimbabwe (Commercial Division), Harare, on the 10th of October, 2022 under Case H.C. 306/22.
“It follows therefore that corporate rescue proceedings have commenced in terms of section 124(2)(b) of the Insolvency Act [Chapter 6:07],” the notice read.

The notice indicated that in terms of section 125(1)(b) of the Insolvency Act [Chapter 6:07], corporate rescue proceedings are deemed to begin when an affected person applies to the court for an order placing the company under supervision in terms of section 124(1) of the said Insolvency Act.

“It follows from the foregoing that no action or proceedings shall be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court may impose.

“Further, in terms of section 126 of the Insolvency Act [Chapter 6:07], during corporate rescue proceedings, no legal proceedings, including enforcement action, against the company, or in relation to any property belonging to the company, or lawfully in its possession, may be commenced or proceeded with, without the leave of the court,” the notice added.

According to the notice, in terms of section 124(3) of the Insolvency Act [Chapter 6:07], each affected or interested party or person has a right to participate in the hearing of the application in terms of this section and may appear before the High Court (Commercial Division), to show cause why an order for corporate rescue proceeding should not be made placing the respondents under corporate rescue proceedings and ordering that the costs of these proceedings shall be the costs of corporate rescue proceedings.

Mhambare’s court appeal stated Telecel had US$1.5 billion in assets as of 31 December 2021, compared to local currency liabilities of ZW$24 billion, which have resulted in a ZW$22.5 billion negative equity.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *