Zimbabwe’s Minister of ICT, Supa Mandiwanzira recently told the parliament of Zimbabwe that contrary to what has been said repeatedly by Econet Wireless Zimbabwe about its licence payment fees, the mobile operator did not pay its licence its full and part of the payment was actually made by the people of Zimbabwe.
While responding to a question from a parliament committee regarding the uneven playing field in telecoms which has been brought up by Econet, Mandiwanzira explained how Econet has actually benefitted from conditions set in its favour through obligation handles by the State on its behalf.
Mandiwanzira was referring to the payment plan which Econet negotiated in 2013 when it renewed its licence in 2013. Rather than pay the full amount of US$137.5 million, Econet asked that the US$60 million in interconnection fees which it was owed by NetOne and TelOne be offset against the payment. NetOne and TelOne are State-owned telecoms operators.
This meant that Econet only “paid” the balance while the government assumed the debt. This arrangement is the basis of Mandiwanzira’s argument.
Econet has consistently pointed out that it is the only operator that paid its licence fee in full and used this is one representation of the unfair playing field in Zimbabwe. It’s unlikely, though, that the operator or its investors will view the arrangement as an example of a fair playing field but rather as a successful strategy to monetise a doubtful asset.
You can read the Minister’s remarks on the matter below.
I would like to say that is actually a lie that Econet paid its licence in full. It’s misrepresentation that has been repeated over and over again to make it a fact but I would like to say that today it actually is not a fact.
The truth of the matter Mr Chairman and Honourable members of Parliament is that Econet, like all the other operators who had their licences due for renewal at that time, were given terms to pay for those licences and those terms were granted on the ability of each operator to pay within a particular period.
During that particular time, Econet indicated that it was able to pay this amount within six months and Econet was granted permission to pay the licence fee over six months. But it is not true that Econet paid $137.5 million which is the licence fee. They paid part of it in cash and the balance was paid on behalf of Econet by the people of Zimbabwe.
What Econet did was that it negotiated with Government that “Oh, by the way, as we are renewing our licence we are owed money by NetOne and we are also owed money by TelOne. Can you as Government take over those loans, those amounts which were accumulated in their day to day operations between their business entities.” They then asked the Government to take over that liability and pay to POTRAZ the licence fee. That is the truth of the matter. $60 million was paid by the people of Zimbabwe, not by Econet.
Of that total licence fee, it was paid, I’d like really to make this very clear so that you understand and everybody understands so Mr Chariman allow me to put all the facts on the table. So what then happened is that Government took over the obligations of its parastatals which were due to Econet.
Now I will ask members of the committee who are seated here how many companies are owed money by parastatals in this country? How many businesses who do business with Government or parastatals are owed huge amounts of money and the Treasury has not taken over those amounts? Many companies. But in this particular case, Econet had the advantage of having its $60 million debt taken over by Government, and Government took from the people of Zimbabwe through the taxes they pay, $60 million to pay to POTRAZ as part of the licence fee for Econet.
Those are the facts, Mr Chairman. And that is what happened. So when people sit before your committee and say we paid our licence fee in full they are being dishonest. The truth is the people of Zimbabwe paid $60 million of that amount on behalf of NetOne and TelOne.