What economists said on Telecel closure

Oliver Kazunga Senior Business Reporter
THE move by the government to close Telecel Zimbabwe’s operations is a step in the right direction as it demonstrates fair application of the law, economic analysts say.

Supa Mandiwanzira, the Minister of Information Communication Technology, Postal and Courier Services said Wednesday that a committee had been set up by Cabinet to begin the process of ensuring that Telecel ceases operations for breaching licensing and indigenisation regulations.

Foreign investors own 60 percent of Telecel stake with locals retaining 40 percent through Empowerment Corporation.

The development is contrary to the 51/49 percent requirement under indigenisation regulations.

Telecel has been operating without a licence for the past two years after failing to pay $137,5 million to Potraz for the licence.

While there are fears the closure of the firm would result in loss of jobs and frustrate subscribers, economists have commended the government’s stance.

“If it’s a legal breach whether by a local or foreign company, the law shouldn’t be applied selectively. We don’t want to have a situation where the law is selectively applied,” said Kipson Gundani, the chief economist for the Zimbabwe National Chamber of Commerce (ZNCC).

He, however, said the proposed closure should take into account the plight and welfare of workers.

“What the government should do is to make sure workers’ welfare isn’t compromised,” he added.

Gundani said the closure of Telecel does not mean that government would bear the burden of compensating workers as it was not taking over the mobile operator.

Another economic commentator Luxon Zembe concurred with Gundani and urged Telecel to act swiftly to protect the interest of the estimated 2,9 million subscriber base it has built over the years.

“Telecel should protect the interest of their subscriber base which at the moment is 2,9 million. If they lose this clientele base they might not get it. What we aren’t sure of is whether or not Telecel is failing to raise the money for the operating licence and if it’s failing then this raises the issue of capacity, ” he said.

Zembe said Telecel needs to strengthen its capacity so that it competes with Econet.

He said if the firm closes it was mostly likely that a majority of its subscribers would move to Econet which will create a monopoly. “This needs to be avoided as it creates inefficiencies,” he said.

“Chances are high that if they close, they’ll have challenges in terms of meeting their liabilities such as paying workers their terminal benefits.

“However, the issue isn’t about paying terminal benefits but it’s about saving jobs. Telecel has to resolve their internal issues in the interest of the economy and the country at large because their closure will send bad signals to the country’s potential investors.”

Another economic commentator Jabulani Nkomo said the government should not end on Telecel in enforcing indigenisation and economic empowerment regulations but should extend it to all companies that have not complied with the law.

Nkomo said it was sad that Telecel was closing down yet it was offering the cheapest rates compared to other mobile operators.

Telecel is reportedly bankrupt amid reports the company was over valued at $200 million yet it is worth about $50 million.