Orascom in talks with Zimbabwe government to reduce stake in Telecel

Orascom has entered into talks with Zimbabwe’s government regarding the reduction of its 60 per cent stake in Telecel Zimbabwe. Under the country’s recent laws restricting foreign ownership of businesses, Orascom will be required to reduce its stake to a non-controlling 49 per cent.

Zimbabwe’s Indigenisation and Economic Empowerment Act was passed three years ago and requires that a minimum of 51 per cent of all foreign-owned businesses be transferred to locals. Foreign-owned companies operating in the country now have 45 days to submit plans to the government explaining how they intend to comply with the law; all such plans must be implemented within six months.

In 2007, Orascom fell foul of Zimbabwe’s telecoms regulator when Telecel’s licence was revoked on the grounds that it had not met the then-June deadline to transfer majority ownership to locals. The decision was appealed and a two-year extension granted, with Orascom saying it had been unable to conclude a “fair value transaction” for the shares it needed to offload.

Telecel Zimbabwe is 40 per cent owned by a holding company controlled by president Mugabe’s nephew, Leo Mugabe. It is the country’s second-largest operator, with over 1.5 million subscribers and 22 per cent market share.

East Africa Com takes place April 5-6 in Kenya. Speakers include John Barorot, CTO, Safaricom