Maravi

ZICA urges floating of govt shares in Zamtel

ZICA urges floating of govt shares in Zamtel
By Chiwoyu Sinyangwe and Fridah Zinyama
Tue 22 June 2010, 04:01 CAT

ZAMTEL managing director Mukela Muyunda has disclosed that all employees will be retrenched as Lap Green Network Telecommunication takes over the country’s biggest telecommunication firm.

And Zambia Institute of Chartered Accountants (ZICA) has called for the floating of government’s 25 per cent shareholding in Zamtel on LuSE for the public to continue having ownership in the company.

Meanwhile, Independent Management Consulting Services (IMCS) Limited management consultant John Kasanga has expressed concern at government’s decision to cede majority shareholding to Lap Green Network of Libya at a cost of US $257 million.

The partial privatisation of Zamtel has raised a lot of debate in the country, with the public questioning the manner in which the whole transaction was handled by the government.

Zamtel’s partial privatisation has raised a lot of questions, following the total disregard to procedure that then former transport and communication minister Dora Siliya had taken to chose RP Capital to value the telecommunication’s company assets.

Other stakeholders have argued that government has sold Zamtel to Lap Green Network Telecommunication for a ‘song’, adding that the telecoms company was undervalued.

According to a circular sent to all employees on June 15, 2010, Muyunda stated that all employees would be paid agreed settlement packages after the retrenchment process.

Muyunda stated that the restructuring and rehiring was expected to start in July 2010 and concluded by the next month.

“…As part of the restructuring, all Zamtel employees will be retrenched and all employees will be paid their agreed settlement and packages in full,” Muyunda stated. “For this purpose, the government has allocated a substantial proportion of the total purchase consideration for the payment of the agreed settlement packages to all employees. An independent audit of these packages is being fully undertaken, and independent auditors will verify that payment is made in full to each employee.”

Muyunda said Lap Green Network Telecommunication would after the retrenchment process hire staff who possessed necessary skills and qualification and experience to contribute to realisation of the objectives of the five-year plan and building of a vibrant and competitive organisation.

“It is expected that the restructuring and rehiring will start in July 2010 and be concluded in August 2010,” stated Muyunda.

“This will be done in such a way that operations will not be adversely affected. This is an extremely important exercise since it presents the company with a unique and rare opportunity to identify the real talent that is much needed to affect the turnaround. More information will be provided on how this extremely important exercise will be conducted ; suffice to say it will guided by objectivity and the need to secure a talented, experienced and hard working employee base.”

And Mulendema said there had not been transparency in the sale of Zamtel and the appointment of RP Capital Partners as valuators of Zamtel’s assets prior to its privatisation.

“This is why government should float its 25 per cent shares in Zamtel Ltd on the Lusaka stock exchange so that the public can continue having ownership through buying of shares in the entity,” he said. “The floating of shares will also enable the Security Exchange Commission (SEC) to regulate how the entity conducts its operations.”

Mulendema however supported the sale of Zamtel’s majority shareholding to a private entity.

“…It is a good thing that Zamtel has been sold because it had accumulated significant tax losses that the company was not paying…What the public must appreciate is that Zamtel has accumulated significant tax losses, in that Zamtel has not been paying any direct taxes to the treasury,” he said. “So this sale means that there will be more effective management and re-investment which will bring about improved services and an increased revenue base.”

Mulendema further added that Zamtel would also be able to pay dividends to its shareholders such as the government which would lead to an increase in shareholders’ wealth.

“The sale of Zamtel is likely to add value to the economy and the Zambian citizenry as a whole,” he said.

Mulendema added that this was exactly what had been happening to Zanaco, which had been making significant tax losses and therefore failing to pay its shareholders.

“After the sale of Zanaco and after putting effective management and control systems in place, Zanaco has contributed about K75 billion in form of direct taxes to the treasury because of an increase in profitability and service delivery to the public,” he said. “The bank has also been able to pay dividends and list on the stock exchange where the public is able to own shares.”

Mulendema added that once listed on the stock exchange, Zamtel would be regulated as a public limited company.
And Kasanga has questioned government’s rushed decision in privatising Zamtel.

“Zamtel’s problems have been there for a long time...why has this government suddenly felt the rush to privatise Zamtel in this manner,” he asked. “The opaqueness in the manner government has carried out the entire transaction is extremely worrying.”

Kasanga said Zamtel’s problems were actually created by government itself in that they were taking long to dismantle the huge debt that had accumulated with the company.

“...that the company had actually managed to survive this long is due to the private sector who have actually been paying their bills to the telecoms company,” he said.

Kasanga wondered why government did not carry out an independent study to determine what was wrong with the company instead of quickly disposing of the 75 per cent shares to Lap Green Network.

“The value at which Zamtel was sold will continue to be a contentious issue,” he said. “Its infrastructure should have been valued as government had been making money from the international gateway.”

Kasanga said government was very short-sighted in its decision to dispose of the Zamtel shares in that manner as they did not consider the fact that telecommunication was one of the fastest growing industry in the world.

“The public equally has issues with the way government disposed of the shares....the percentage sold to Lap Green was too high,” he said. “Am not too sure whether we have gotten a fair price ...”

Kasanga further advised government to listen to the concerns which the public had been raising over the sale of Zamtel.

But President Rupiah Banda has maintained that the partial sale of Zamtel was irreversible because it had been done legally.

President Banda maintained that the sale of Zamtel to Lap Green Network was binding as it had been done within the law and there was no way of reversing the process.

Meanwhile, former University of Zambia (UNZA) Development Studies lecturer Fred Mutesa said government should avail the business plans that Lap Green Network has for Zamtel for the public to have something to hold the investor accountable to if it fails to deliver.

“We would like to know the business plans that the new owners have...and how much money they intend to invest in Zamtel and also how many employees they intend to absorb from the Zambian workforce market,” he said.

Dr Mutesa also said government should not have entrusted majority shareholding to such a strategic company such as Zamtel to an investor.

“Government should have made an effort to try and recapitalise Zamtel as it is still a viable entity, as witnessed by the number of bidders,” he said. “Its lack of profitability was due to government’s inability to pay its bills and the MMD’s tendency to siphon funds to fund its party activities.”

Dr Mutesa, who is also Zambians for Empowerment and Development (ZED) president, said the appointment of cadres to management positions had also affected Zamtel’s operations which had contributed to its non-profitability.

“Government does not seem to understand the spin off effects that can be achieved from a company such as Zamtel,” said Dr Mutesa.

Labels: ITC, LAP GREEN, LUSE, MUKELA MUYUNDA, ZAMTEL, ZICA

posted by MrK @ 3:16 PM