Zimbabwe places Telecel under corporate rescue

Telecel, Zimbabwe's struggling state-owned mobile provider and the country's smallest operator, has been placed under corporate rescue to avoid its liquidation.

The move by the Zimbabwean government will provide protection to Telecel if its creditors take legal action.

In October 2022, Connecting Africa reported that the Communication and Allied Service Workers Union of Zimbabwe filed papers in the country's High Court asking for corporate rescue.

The union cited that Telecel was insolvent and faced liquidation if no rescue action was taken immediately.

"The worsening performance indicates the existence of a material uncertainty that may cast significant doubt on the company's ability to continue operating as a going concern," the union's Secretary General David Mhambare said in court papers at the time.

The court application added that as of December 31, 2021, Telecel's assets were US$1.5 billion against total liabilities of $24 billion, pointing to negative equity of $22.5 billion.

Zimbabwe telco problems

Telecel being placed under corporate rescue comes at a time when Zimbabwean telcos in general have been struggling, especially in 2022 and early 2023.

In March 2023, telcos in the country petitioned the government to allow them to peg their tariffs in US dollars rather than the local Zimbabwe dollar to protect them from hyperinflation.

That request followed the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) approving tariff increases to help them survive rising input costs in July 2022.

Telecel was placed under corporate rescue after the Communication and Allied Service Workers Union of Zimbabwe filed court papers. (Source: created by Allexxandar - www.freepik.com)

Although Zimbabwean mobile operators have been going through a difficult period, it hasn't stopped international companies from showing interest in the Southern African country.

One such company is Swedish vendor Ericsson, which partnered with Econet Wireless Zimbabwe for its 5G expansion plans in the capital, Harare.

Econet launched 5G in Harare in February 2022 and expanded to Bulawayo in May 2022.

Market research company Omdia, a sister company of Connecting Africa, estimates in the first quarter of 2023 Telecel had 389,999 subscribers and 2.65% market share.

According to Omdia estimates, Econet Wireless Zimbabwe is the biggest mobile operator in the country with over 10 million subscribers and a little over 70% market share over the same period. NetOne Zimbabwe, on the other hand, had an estimated 3.9 million subscribers with a 27% market share.

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*Top image source: Litigation photo created by Racool_studio - www.freepik.com.

— Matshepo Sehloho, Associate Editor, Connecting Africa