Telecel faces licence cancellation threat over level of indigenous shareholding

Zimbabwean cellco, Telecel may face having its mobile licence revoked if it does not sell a majority of its shares to local shareholders.

Communications and Infrastructural Development minister Nicholas Goche told local media that Telecel’s mobile phone licence would not be renewed until it had addressed what he called its "shareholding anomaly".

At the same time, if the licence is renewed, it will be at a higher rate of US$137 million. The licence expires next month.

The company’s Egyptian parent, Orascom Telecom owns a 60 per cent stake in the company. The remaining 40 per cent of Telecel is owned by a holding company controlled by president Robert Mugabe’s nephew, Leo Mugabe.

Telecel is required to offer a further 20 per cent to local shareholders to bring its foreign shareholding down to 40 per cent.

The sale of the Zimbabwean stake would resolve the foreign shareholder compliance, but it also reduces the likely value of the company as the pool of potential buyers is reduced to just Zimbabwean investors. That the stake has to be sold within the next few weeks would also put pressure on the owners to sell at a discount just to secure a deal.

Zimbabwe’s Indigenisation and Economic Empowerment Act aims to transfer at least 51 per cent control of all foreign-owned firms, including mines and banks, to locals.