In a move that’s likely to breath new life into Telecel Zimbabwe, local private equity equity investment and advisory firm, Brainworks Capital Management, has offered to buy the 40% minority stake held by the Empowerment Corporation in the telecoms firm. A report in today’s Herald Newspaper says the investment firm has offered some $20 million for the stake.
The move seems to be the only option for a company whose current shareholders have not found a solution yet to the indigenisation problem so they can move to pump in money into the company and compete effectively on the market. The impasse has also affected the company’s ability to invest in basic things like an operating license on time. And just last week, POTRAZ wrote Telecel a letter advising them either they comply with indigenisation laws or give up the license. Currently, 60% is held by Vimpelcom, and the 40% by the empowerment corporation. The indigenisation law requires that majority ownership in the company be held by local indigenous Zimbabweans.
According to Patrick Zhuwawo, the Empowerment Corporation is currently considering the Brainworks offer.
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The next move by Brainworks will have to be buying the Vimpelcom stake in the business. Or at at least helping find a buyer for it, which is likely to go be an easier task than it has been with the Empowerment Corporation owning 40% of the company. Vimpelcom has been looking to sell Telecel Zimbabwe for a while now but haven’t succeeded finding a buyer likely because suitors didn’t want to have to work with the Empowerment Corporation as a partner in business.The Empowerment Corporation and hasn’t exactly demonstrated they are able to put the company’s interests first, ahead of and self interest over the years. Further, shareholders in the Empowerment Corporation are fighting each other for stake in the company.
In October last year, Vimpelcom sold all its Telecel assets in Africa except for the Zimbabwean Operation. The other assets were sold to Econet. Even if Brainworks decides to buy the Vimpelcom stake, chances are they will only want, because they only need, to buy enough to satisfy the indigenisation law. It will be interesting to see which companies outside Zimbabwe will suddenly be interested in Telecel Zimbabwe once the Empowerment Corporation and indigenisation is out of the picture. We don’t think it’ll Econet as the competition regulators would likely not allow it. MTN, Airtel, Tigo?
On The Telecel Zimbabwe side, internally, once the Brainworks transaction goes through, a staff restructuring will also likely be high priority.