Maravi

Zamtel shouldn’t be sold in its current state – Kashita

Zamtel shouldn’t be sold in its current state – Kashita
Written by Kabanda Chulu
Tuesday, August 04, 2009 2:19:28 AM

FORMER communications and transport minister Andrew Kashita has said Zamtel should not be sold in its current state because liabilities will "swamp" its assets and the final price will be valueless.

And Kashita has challenged the government not to express ignorance about the debts owed by Zamtel because it is government that appoints the board of directors and receives annual and financial reports. In an interview in Lusaka yesterday, Kashita said 75 per cent shareholding was far too large to be given to a foreign-owned company.

"This government will be making a big mistake to sell Zamtel in its current state because there are people out there who know that this business is profitable and giving them 75 per cent is a mistake and when buying, they will insist that government takes out liabilities like bad debt and other charges and if you take out those and deduct those liabilities out from assets, the liabilities will swamp out the company and it will be sold for a song," Kashita said.

"Liabilities will swamp all assets and when shares are offloaded at the stock exchange to the public they will have no value since they will be in the negative so government should not sell Zamtel the way it is now because there is need to know how those liabilities have come about."

He advised the government to understand that the telecommunications industry was a lucrative business and giving away Zamtel in its current state would be regrettable.

"Giving 75 per cent to foreigners will be regrettable because this is a profitable business, for example, look at Zamcell, which was taken over by Celtel and now Zain which will also be taken over by somebody [Orange Mobile from France], this clearly shows that this business is lucrative and people are making money since you do not sell a business if you are not making money, you stay on until profits starts flowing," Kashita said.

"Government should retain 25 per cent while the so-called strategic partner should be sold 30 per cent and we shouldn't just look to people who make equipment or latest technology but those who can provide good management skills and with technology and telecommunication skills and then 40 to 50 per cent should be sold to Zambians and eligible institutions like NAPSA, ZSIC, LASF and others, also government should have a golden share that should be effective to override the rest and other shareholders and to ensure majority owned there must be a limit on individual shares owned by Zambians."

He said the main issue at hand was to know the balance sheet of Zamtel that showed profit and loss accounts in order to arrive at the true value.

"When this is done, we can know the true value of Zamtel and we will know how losses have come into the company, it is not lack of business for both land and cell phone services because people are waiting to be connected and there is plenty of business. There is no shortage of business in this sector," said Kashita.

"Zamtel does not collect revenues and this affects business operations since company's expense are still there and had already been spent so when you look at balance sheet, there is bills receivable, which are not collected and but bills payable are being demanded and these include taxes, emoluments among other items. So Zamtel has reached a point where cash position in the bank is grossly overdrawn to cater for expenses but in receivables, there are huge funds still uncollected and the biggest debtor is government and its agencies hence Zamtel should not be to sold to anybody as it is."

President Rupiah Banda recently announced government's intention to sell a 75 per cent stake in Zamtel to an equity partner.

Labels: ANDREW KASHITA, ZAMTEL

posted by MrK @ 1:19 AM