Telecel sweats over licence fees

June 7, 2019


Telecel Zimbabwe is sweating over licence fees after failing to adhere to prescribed  threshold as the telcos regulator piles pressure on the country’s third largest mobile network operator, Business Times heard this week.

In 2013, Telecel entered into an agreement with government in which the mobile network operator would pay for its US$137,5m licence fees in installments until 2020.

It has failed to adhere to the payment plan drawing the ire of government. Correspondence seen by Business Times showed that government’s patience was wearing thin on Telecel.

In a letter dated July 6 2018 to Telecel Zimbabwe’s CEO Angeline Vere, Accountant General Daniel Muchemwa said government “notes that Telecel Zimbabwe has not made licence payments for 2017 and 2018 as per payment schedule highlighted” in the August 6 2013 agreement.

“It is against this background that we request Telecel Zimbabwe to pay the outstanding amount as per agreement of US$25 million as a matter of urgency,” Muchemwa wrote in a letter copied to Postal and Telecommunications Regulatory Authority (POTRAZ) director general Gift Machengete and permanent secretaries in the ministries of Finance and
Information, Communication Technology.

Telecel did not pay the installments. In a letter dated December 10 2018 to Vere, Machengete demanded a payment plan from Telecel no later than December 27.

In the letter, Machengete said Telecel owed the authority US$93 556 577 as at November 30 2018. The amount was made up of monthly licence fees (US$875 737), spectrum and number fees (US$2 034 222) and US$90 646 618 in licence renewal fees.

“The amounts owed are overdue and the authority’s efforts to get a commitment from yourselves on how you intend to liquidate the debt have so far been unsuccessful,” Machengete wrote.

“In light of the foregoing, please urgently submit a payment plan that addresses all outstanding amounts.”

Vere told Business Times said Telecel was weighed down by the deteriorating economic environment but is working to ensure it complies with regulatory requirements.

“We have obviously been affected by the downturn in the economy like any other organisation in this economy but we are in constant communication with the regulatory authorities to explore ways of ensuring we comply as expected,” she said.

Vere was optimistic Telecel would have paid the full US$137,5m licence fees by the end of next year according to a 2013 agreement.

“At the moment, with various ongoing efforts to recapitalise the company, and the gradual improvement in our financial performance, we have reason to believe we will be able to meet the requirements expected of us,” she said.

According to a payment plan agreed between Telecel and government, Telecel was supposed to pay US$15m in 2017 and US$20m in 2018.

It is not the regulators that Telecel has to contend with. It suffers from weak capitalisation and was the only mobile network operator that suffered a decline in subscribers last year.

The company has suffered from exodus of key professionals with at least eight leaving each month. It has also failed to recruit personnel as the salaries it offers are not commensurate with industry trends.

Government, through ZARNet acquired 60 percent in Telecel Zimbabwe in 2016. It is represented on the board by Francis Mawindi and Selby Hwacha. The remaining shareholding is held by Empowerment Corporation, a coalition of indigenous groupings. Empowerment Corporation is represented in the board by James Makamba and Jane Mutasa.

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