Telecel Zimbabwe currently facing serious capitalization issues continues to be caught up in petty boardroom squabbles, amidst indications that some board members are deliberately derailing progress, postponing board meetings at the expense of the telecoms company.
In their first first board meeting, Telecel directors had indicated that they are going to be capitilising the asset at the tune of $500 million, and since that board meeting, spanners have been thrown in the way, while some board members have actually been paid for attending meetings they are absconding.
By Toneo T Rutsito (@toneo1st)
“What is more disturbing is the fact that some board members have instructed the executive to pay them board meeting allowances for meetings never convened, yet on ground the company continues to suffer serious market share drop and and serious potential revenue loss ” said a reliable source.
Two scheduled board meetings have already been cancelled amidst unclear circumstances. Telecel board members are paid $5,119.00 for the Chairman, Mr James Makamba, $4,233.00 for the (Empowerment Corporation) Jane Mtasa and $2,363.00 (Telecel International) for Selby Hwacha, Francis Mawindi and Babra Rwodzi.
The first Telecel board meeting was held on the 11th of April this year where they agreed that the Revenue target USD 52,917 million was considered too low. The meeting also acknowledged that there is a core-relationship between capital investment and the Company’s performance in terms of revenue generated.
It was acknowledged that there was need for significant investment in network expansion. The Board tasked management to submit the capital investment requirements and a 5 year Strategic Plan with assistance from the Strategy and Business Development Committee members, to enable the Board to pursue some financing options.
Presently, Telecel Zimbabwe is technically insolvent hence there is need for the Shareholders to provide a letter of support in meeting any liabilities on behalf of the Company in the event the Company fails to meet its obligations.
The minister of ICT, Hon Kazembe Kazembe must be quickly seized with this matter to make sure that Telecel Zimbabwe comes back to full swing operations. The need for reasonable capitalization can never be more urgent as government is now the major shareholder through the Telecel Zimbabwe acquisition.
A second board meeting to this effect was held on the 3rd of July, for the second quarter of the year. However nothing much was implemented and a follow up on the resolution to the next meeting which recommended that total capital investment of USD$514m is needed to enable operationalization of their new strategy
Of this $414.0m will be channeled to Network Capital Expenditure and Subscriber Database, $72.8m for acquisition, automation and upgrades of business support systems and computers infrastructure, while $10 million will go towards Commercial capex .
The other main problem with the Telecel Zimbabwe board membership is the equilibrium balance , representation which is now distorted towards 60% government shareholding against 40% Empowerment Corporation (EC) .
Babra Rwodzi, Selby Hwacha and Francis Mawindi were the government representatives, while Mrs Rwodzi has been appointed an MP, she immediately seizes to become a board member meaning they only have two representatives against EC represented by James Makamba and Jane Mtasa.
This problem resurrects the Telecel ghost, where shareholders must all contribute to the asset against their share capital, where historically EC has not made any fundamental capital investment over the shares they own, but rather internally squabbled for decades over ownership.
It must be within the shareholders interest to raise capital for the asset according to their shareholding equity, instead of only meeting to get paid for board seatings when the asset is not performing, and reducing value every year.
Government through loans, has capitalized NetOne close to a billion while the major player Econet Wireless Zimbabwe has seen more than 1 billion investment and Telecel is crying for $500 million over 5 years, which makes this very noncompetitive and irrational.
Telecel Zimbabwe now has a meager 10% market share in Zimbabwe with subscriber base plummeting to an all time low of 1.2 million which is likely to continue on a free fall should they not be an urgent resuscitation strategy amidst lack of will power by some board members.