Zim offers big stakes to SA firms
Zimbabwe’s government says it will approach Telkom and MTN to offer them a 60% stake in its two telecommunications companies TelOne and NetOne.
Zimbabwe’s government says it will approach Telkom and MTN to offer them a 60% stake in its two telecommunications companies TelOne and NetOne.
The move is part of the government’s plan to privatise its state enterprises by selling them to interested investors.
Zimbabwe’s government is short of capital to invest in the two companies and it strongly feels that only seasoned international investors can inject new life into the struggling firms.
Zimbabwean finance minister Mthuli Ncube told Business Day on Thursday the cabinet had directed that the two companies be privatised by September 2019 with the two SA companies identified as among the bidders. At least two other unnamed international firms are interested.
Telkom and MTN have expressed interest in buying TelOne and NetOne separately but Ncube said his government would soon table a new joint package for the SA companies.
“I am aware of the Telkom and MTN proposals. Our position is that government will get better value for money if these are offloaded together as a package. We are going to approach both Telkom and MTN and let them know that they have a much bigger asset to compete for in the form of the two companies and not individual companies as was before.”
Asked why his government was selling off the two companies, Ncube said new investors were the best way to go for Zimbabwe’s telecoms firms.
“The mobile phone business is a fast-moving business in terms of technology. These two companies have done everything they could do to compete in an environment that has no access to equity capital.
“Government is constrained in terms of putting equity at the present time. These companies need equity injection and technology injection in US dollars, that is why we are deciding to partially privatise.”
Ncube explained that under the joint package proposal, his government would not merge TelOne and NetOne but would set up a special purpose vehicle to sell shares, in an arrangement that can be done in two weeks.
NetOne and TelOne have been eclipsed by Zimbabwe’s largest mobile operator Econet, which has grown into a diversified global enterprise, as well as being one of the country’s top three companies by turnover.
In 2010, MTN, which operates in 21 countries in Africa and the Middle East, expressed interest in investing in NetOne, but the deal fell through due to the country’s indigenisation law.
The law restricted foreign investors’ shareholdings to 49% and was repealed in 2018 to create a more favourable environment for investors.
TelOne has 258,000 voice subscribers, but its $380m legacy debt remains a major bottleneck. NetOne has more than 5million mobile subscribers and recorded a profit of $10m in 2018, up from a loss of $58m in the year before.
Price Waterhouse Coopers (PwC Zimbabwe) is the current transaction adviser for TelOne and the government will be engaging with it to advise NetOne on the proposed sale.