Sources close to the matter have said that Mr James Makamba and the Empowerment Cooperation, (EC) are the ones behind the downfall of Telecel as they have failed to fund the asset, but however continuously milk the company.
"Telecel Zimbabwe has never received any financial support from the Empowerment Corporation in terms of capital investment with virtually all the funding of its network expansion, license repayment and working capital needs primarily coming from the majority shareholder and in some instances from internal company resources." added the source.
The source added that, "EC has contributed nothing in capital investment and the question that must be asked is, why then does it continue to have such a significant stake in the company including chairing the board of directors."
The biggest problem is how best do they pull through the asset amidst indications that EC is only sitting on 40% they were allocated to by government, but have failed to capitalize the asset according to their shareholding.
Historically, In Jan 1997 - Telecel International Ltd (TI) & the Empowerment Corporation (EC) entered into a Pre Bid Protocol with a commitment to jointly pursue a bid for a license to operate a cellular mobile telecom network. A shareholders agreement was signed with the following distribution: 60% EC and 40% TI.
EC secured a bank guarantee of $3.5million from CBZ to pay for its shares in Telecel but failed to honor its payment obligations and instead TI settled the payment with CBZ on the understanding that EC would pay it back. To date this has not materialized and thus effectively EC did not pay up for its 40% equity in Telecel.
However in 2004 - TI offered 11% of TZ shares to EC for a consideration of $3.5M following threats from POTRAZ to comply with the local indigenization law that limits foreign ownership in local companies to 49%. EC however failed to comply and the equity structure remained unchanged.
In 2009 Vimplecom bought Orascom for $6.5 billion, getting an indirect equity interest in Telecel Zimbabwe through the Telecel International investment vehicle. This is the same 60% which was paid for by the government for only $40 million in 2015.
Government is also worried that it would be funding the asset on 60% basis while EC does not have a capitalisation plan, a move which may force them a buyout, as a way forward.
The current Telecel structure stands as below
Telecel International (wholly owned by Zimbabwe Government): 60%
Empowerment Corporation: 40%
Empowerment Corporation Equity Structure
Kestrel Corporation - 21.7%
Sulpon Investments - 16%
National Miners Association of Zimbabwe - 3%
Indigenous Business Women's Organization - 0.0023%
