Telecel Shareholders Told To Take Token Payout In Turnaround Deal

Telecel Zimbabwe’s shareholders have been offered token payouts of as little as US$0.50 to give up their equity under a corporate rescue plan that seeks to bring the country’s smallest mobile operator back to profitability within 24 months.

The plan, prepared by Grant Thornton practitioners Kundai Tibugare and Bulisa Mbano, projects a US$4.4 million loss in the first year, before swinging to a profit of US$5.4 million in year two, US$7.6 million in year three, US$14.8 million in year four and US$24.3 million by year five.

The turnaround will hinge on a network revamp anchored on 4G/LTE deployment to drive coverage, subscriber growth and higher average revenue per user.

Under the proposal, majority shareholder Mutapa Investment Fund, which holds 60 per cent, will receive US$1 as full and final settlement for its equity, while Empowerment Corporation, which holds the remaining 40 percent, will get US$0.50.

In recognition of past funding support, shareholder-related loans totalling US$97.7 million will be compromised at 7 cents in the dollar, giving a cash settlement of US$6.8 million to MIF.

Prospective investor Augustus Capital has proposed allocating a 15 per cent strategic stake in the restructured company to MIF, but on condition that MIF provides satisfactory assurance it can meet its obligations. If it fails, MIF will be required to acquire the shares at a mutually agreed valuation.

Huawei’s secured claim of US$10.7 million for network equipment supplied between 2010 and 2012 will be compromised at 40 cents in the dollar, equating to US$4.3 million, while its unsecured balance of US$4 million will also be settled at 40 cents, or US$1.6 million.

Trade creditors owed US$9.8 million will receive 40 cents in the dollar, totalling US$4 million, and equipment supplier ZTE, owed US$8.5 million, will also be paid at 40 cents, or US$3.4 million.

Historic licence arrears of US$40.2 million owed to POTRAZ will be compromised at 7 cents in the dollar, or US$2.8 million, while the balance of US$54.8 million for future licence years will be paid in full over eight years with a one-year grace period.

Statutory liabilities of US$691,014 owed to ZIMRA, NSSA and other pension funds, together with three months of outstanding salaries and legacy employee debt of US$257,403, will be settled at 100 per cent.

On jobs, the plan states that Augustus intends to retain all 248 employees, but has set aside US$1 million to cover any unforeseen retrenchment costs arising from future restructuring, with any new employees to be recruited on sustainable contracts after interviews.

Telecel was placed under voluntary corporate rescue on 27 October 2025 to protect it from legal action and liquidation while fresh capital is secured. Its active subscriptions have collapsed to 303,284 by the end of 2025, down from a peak of over 1.6 million, with market share now below one per cent.

The rescue plan must still be approved by at least 50 per cent in number and 75 percent in value of both creditors and shareholders, and is subject to regulatory approvals and completion of due diligence by Augustus Capital before the takeover can proceed.

More: The Sunday Mail