Vimpelcom today finally announced officially the takeover of its subsidiary Telecel Zimbabwe by ZARNet the Government owned ISP, for a sum of US $40 million. The current Telecel CEO, Angeline Vere, went on to advise staff in Zimbabwe of the change in ownership, that is them now being civil servants.
That the government was interested to buy Telecel Zimbabwe was first announced back in July but until late September, Vimpelcom maintained they would only sell if the price was right. Whether the $40M price makes sense for their investment into the company to date is doubtful though. The company put in $70 million just 3 years ago and is reported to have invested some $237 million since 2009.
Sensing the danger when the indigenisation pressure mounted, Vimpelcom took a more hesitant approach to injecting more money and started, in their financials, reporting the investment at cost, before making no mention of it altogether eventually. Between indigenisation, fellow shareholders (Makamba and company) that Zimbabwe’s ruling party hate for political reasons, unpaid license fees by Telecel, Ousted shareholders that wanted back in (Jane Mutasa, War Veterans, Chiyangwa), Vimpelcom had little leverage.
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The takeover propels ZARNet into one of the biggest tech companies locally as it already operates an ISP business, website design business as well as an IT company called Portnet Software (provides SAP consultancy) which government took over in September this year.
Here’s the full Vimpelcom release:
VimpelCom and Global Telecom enter agreement to sell their operations in Zimbabwe
msterdam (November 18, 2015) – VimpelCom Ltd. (“VimpelCom”, “Company” or “Group”) (NASDAQ: VIP), a leading international provider of telecommunications services headquartered in Amsterdam, today announced that its 51.9% owned subsidiary, Global Telecom Holding S.A.E. (“GTH”), has entered into an agreement with ZARNet (Private) Limited to sell its stake in Telecel International Limited for $40 million. Telecel International owns 60% of Telecel Zimbabwe (Pvt) Ltd. Transfer of ownership to ZARNet will occur after customary conditions are satisfied.
ZARNet is wholly owned by the Government of the Republic of Zimbabwe through the Ministry of Information & Communication Technology, Postal and Courier Services.
This release contains forward-looking statements. Forward-looking statements are statements that are not historical facts, and include statements regarding the ability to complete, the expected timing of completion and the related potential benefits of the transaction described above. Forward-looking statements involve inherent risks, uncertainties and assumptions, including, without limitation, the possibility that the transaction may not materialize as expected or at all. If such risks or uncertainties materialize or such assumptions prove incorrect, actual results could differ materially from those expressed or implied by such forward-looking statements and assumptions. The forward-looking statements contained in this release are made as of the date hereof, and GTH expressly disclaims any obligation to update or correct any forward-looking statements made herein due to the occurrence of events after the issuance of this release.