Zim engages WB on telecom giants sale
ZIMBABWE has engaged the World Bank’s International Finance Corporation (IFC) to be transaction advisors for privatisation of its telecommunications companies NetOne Cellular Limited and TelOne after cancelling a contract it had signed with Price Waterhouse Coopers (PwC). TelOne, the country’s sole fixed telephone company and NetOne, the country’s second largest cellular carrier are among State controlled entities earmarked for privatisation by the Government as it seeks to ease burden on the fiscus and enhance efficiency. Last year, Finance and Economic Development Minister Professor Mthuli Ncube said NetOne and TelOne would be sold as one entity with Government retaining 40 percent shareholding. In addition to disposal of its stakes in Telecel Zimbabwe, Zimpost and POSB Savings Bank, the Government is looking at raising as much as US$350 million. Minister Ncube said last week a formal request had been made to the World Bank after NetOne and TelOne failed to raise US$5 million needed by PwC. “NetOne and TelOne have indicated that they cannot afford US$5 million transactional fees for consultancy services,” said Minister Ncube while giving an update on privatisation. “Following the unsustainable fees for the transaction, Government has cancelled the transactional contract with PwC and is looking at retendering or sourcing for the services of other bi-lateral or multilateral partners. “In this regard, a formal request has been made by the secretary of SEPs Reforms, Corporate Governance and Procurement to the World Bank local office to ask IFC to be transactional advisors since these do not need upfront payment.” Covid-19 has affected pending visits by IFC representatives in SA to discuss the request, added Minister Ncube. TelOne’s active fixed telephone lines declined to record 260 959 in the first quarter of 2020 from 265 734 in the last quarter of 2019, according to the Postal and Telecommunications Regulatory Authority of Zimbabwe latest telecoms report. NetOne subscribers marginally rose 3,23 million in the same period. Ernst & Young was chosen transaction advisor for Zimpost and contract negotiations are underway. The company has consolidated Courier Connect and Post Properties to streamline revenue streams and reduce costs under a new business model which will determine the partial privatisation route. KPMG was recently appointed advisors for the partial privatisation of POSB, with the consultancy contract having been finalised and awaiting signing. EY was appointed advisors for Agribank and contract has already been signed. Ernst & Young has since completed reports on financial due diligence, tax due diligence and legal due diligence. EY is finalising the business valuation, strategic option paper, information memorandum, invitation of expression of interests and bidding documents. The Ministry of Lands, Agriculture, Water and Rural Resettlement have proposed transformation of Agribank to Land Bank prior to privatisation. The procurement process of engaging an advisor for the partial privatisation of the Infrastructure Development Bank of Zimbabwe has been completed. The unnamed advisor has commenced work, with the expected time to complete the engagement of a Strategic Partner being eight months. The advisors have finalised the capital raising strategy and business and asset valuation. It is anticipated that by the end of December this year, and given the delays caused by the Covid-19 which affected the original work plan, identification of the ideal strategic partner would have been finalised.