Telecel Zimbabwe has not paid its licence instalment in part settlement of the $137,5 million regulatory requirement for renewal of its Operating licence since December 2016.The payment is in line with their agreement with the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz).
Speaking during a Parliamentary Portfolio Committee on Information Communication Technology,Postal and Courier Services,Telecel CEO Ms Angeline Vere admitted that they had not met their licence obligations as per agreement.
‘We last paid our licence in December 2016,we did not pay in 2017 and 2018 due to financial constraints.’ said Ms Vere.
In overall,Telecel owe RTGS$90 million in licence fees but as per the agreement they made with Potraz they have an overdue amount of RTGS$35 million that they are yet to pay.
In their submission,Telecel highlighted how mobile network costs are driven by several factors such as market structure,product offering,technology and others These factors differ from country to country and have a diverse impact from country to country.As technology evolves there is need to continuously replace equipment and undertake major upgrades that require a lot of capital
Capital Expenditure items such as the Operating licence of RTGS$137.5 million,hardware and software,site constructions as well as installing costs are some of the things that Telecel require a lot of money on.Sadly the money has not been coming in and the company has been under performing and the government takeover has not done any good.
Financial woes have been the major reason why Telecel has failed to fulfill its payment obligations on the basis that there have been no capital injection from the major shareholders.The company is slowly losing its battles against its competitors who are somehow adapting to a hostile economic environment which is capital intensive.
From the outlook even though the company has been faced with a deep-rooted failure and sluggishness to improve its products and services to be able to captivate new customers lack of capital injection remains a huge problem.
In a deal that had dragged on since 2014, the government of Zimbabwe completed the acquisition of Global Telecom Holdings’ (GTH) entire shareholding in Telecel International for $40 million in 2016 thereby becoming the major shareholder.Through its wholly owned internet service provider ZARNet, the government took a compelling control of the country’s 3rd mobile operator Telecel Zimbabwe in which Telecel International had a 60 percent shareholding.The remaining 40 percent is owned by Empowerment Corporation, a group of local investors.
After the takeover,the government announced that it had made a capital injection of US$5 million into the company. This was done in an effort to sanitize the shareholder wars and someday privatize.In all fairness this was a drop in the ocean given the amount of money required for the company to remain afloat and be competitive.
However,no further capital injection was availed to Telecel and with a weak balance sheet the company has been in dire straits with problems coming from all angles.
Its not long before Potraz comes knocking on Telecel’s doors with regards to the overdue licence payment and since it is government owned it may get temporary reprieve to continue operating while payment negotiations are being finalised.