Workers at Telecel Zimbabwe have approached the government seeking to have the country’s smallest mobile telecommunications operator placed under receivership amid revelations the company is mired in financial and shareholder squabbles, Business Times has established.
Receivership is a statutory tool, which is sometimes called judicial management or corporate rescue, designed to allow rehabilitation of financially distressed companies.
Government through its internet service provider Zarnet, controls a 60% stake in Telecel Zimbabwe, after buying out international communications giant, VimpelCom six years ago while 40% shareholding is controlled by Empowerment Corporation (EC), a consortium made up of local companies and investors including James Makamba’s Kestrel Corporation, Jane Mutasa’s Indigenous Business Women.
However, there has been infighting over the shareholding controlled by EC.
David Mhambare, the secretary general of the Communication and Allied Services Workers’ Union of Zimbabwe, this week told Business Times that Telecel employees were lobbying the Minister of Information Communication Technology, Postal and Courier Services, Jenfan Muswere, to place Telecel under receivership, to shield it temporarily from looming legal proceedings by third parties.
This would give it the opportunity to rehabilitate, Mhambare suggested.
“We have proposed the issue of corporate rescue to the government through the Minister of Information Communication Technology, Postal and Courier Services Jenfan Muswere and he promised to institute some changes at Telecel but there has not been any movement to date,” Mhambare told Business Times.
He added: “Our concern is around why the government would continue to hold on to an asset that is on its knees. Since the coming in of the government as a shareholder there has not been any meaningful investment in the company and we believe putting the company on corporate rescue or outright sale is the way forward.”
According to a letter written by employees to Muswere in January this year, seen by Business Times, the situation at Telecel was dire.
Workers claimed revenue for the telecoms company has plummeted to an average of ZWL$7m per month compared to about ZWL$90m monthly achieved by competitors.
Employees also claimed that Telecel’s network coverage was retreating at an alarming rate. They said currently, only a limited number of subscribers in selected towns and cities can access the network’s signal.
Workers also claimed that active subscribers have gone down to around 800 000 as at December 2019 from 2.2m in 2014.
Network availability standard has plummeted from 99.99% to just 40% and SIM cards cannot be replaced as the mobile network systems are down.
“The whole of Masvingo province and Beitbridge (just to mention a few) do not have a network for subscribers. Subscribers going through to Masvingo last had a signal at the (Boka) Skyline Tollgate. Staff members in some offices are now using competitors’ SIM cards in Telecel offices to communicate Telecel business,” claimed the employees.
There are also claims that the mobile operator’s information technology systems are dysfunctional with subscribers failing to recharge airtime due to a combination of system failure and loss of critical staff.
Despite having a controlling shareholding, government seems to have failed to stamp its authority at the country’s third largest mobile network operator. The board is controlled by EC.
Government has a sole representative in the board despite holding a 60% stake after one of its directors resigned after winning an MP post while the other was fired by the board for allegedly leaking confidential information.
All efforts to get a comment from Muswere were futile. He requested questions in writing and had not responded to the inquiries.