The government is looking to sell its telecoms companies, NetOne and TelOne, as a single entity. Finance Minister Mthuli Ncube said this week that government expects to raise US$350 million from selling the two companies as one.
Said Ncube after a cabinet meeting:
Work is already under way to identify transaction advisers. (The) government projects to realise over $350 million from this initial process.
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We are confident that this approach of offering the two companies as a package is the way to go. They are joined at the hip and they are best working together, and I think that will get value for money this way and we will see a more competitive sector that will benefit the user in the long term.
We would set up an SPV, which could then take 100% of the equity in the two entities. They (NetOne and TelOne) would be both held by this SPV, and then the shares are sold at SPV level. You don’t have to do anything about merging operations.
These two companies have done all they could to compete in an environment where they had no access to equity capital, because government is constrained in terms of putting equity (capital)
This means they had to borrow offshore, but debt is saddling these companies so what they need is equity injection, technology injection in hard USD, hence our desire to partially privatise these companies.
TelOne provides fixed telecoms, specifically landline voice calling services and ADSL internet services. NetOne provides mobile voice and internet data services in addition to other smaller services such as VAS and mobile money. The government also has a shareholding in Telecel Zimbabwe, the country’s smallest mobile telecoms company both by subscribers and revenue.