Gvt struggles to offload 74% stake in Net One

February 14, 2020 • Broadband, Companies, Editors Note, Featured, Finance & Banks, Finance and Banking, Mobile, News, Technology, Telecoms

HARARE, (ITNews Zimbabwe) GOVERNMENT has failed to meet its own December 2019 deadline of the partial privatisation of cellular company Net One.

The Government, through the Ministry of Finance and Economic Development Prof Mthuli Ncube, had initially set September 2019 deadline to offload a 74% stake with the aim of courting South African telecoms giant MTN.

That failed and the deadline was pushed to December, again with no success.

On Wednesday, Ncube, though, told a public meeting in Harare that a lot of ground had been gained in the privatisation of both NetOne and TelOne -a plan meant to unlock $350 million value in the two companies.

Telkom, another SA telecoms giant in the fixed line and data business, had been earmarked for a stake in TelOne, another struggling State – owned enterprise that has struggled with debts, poor management, lack of advanced technology and board upheavals.

NetOne has been rocked by serious boardroom squabbles that saw board chairperson James Mutizwa resigning last week.

Audit committee chairperson Sibonile Dhliwayo and her human resources counterpart, Keumetsi Mpandawana also quit.

The remaining board members are Susan Mutangadura (vice-chairperson), Winston Makamure, Rangarirai Mathias Mavhunga and Paradzai Chakona.

In a letter to Information Communication Technology, Postal and Courier Services minister Jenfan Muswere, Dhliwayo said the board lacked professionalism.

“The reason behind my resignation is that the board is currently being run in an unprofessional manner which makes it difficult for me to render my services and responsibilities in a professional and objective manner,” Dhliwayo said in a letter dated February 5.

Just 24 hours later, NetOne chief executive Lazarus Muchenje penned a scathing internal memo to Mutangadura.

“I would like to formally advise you that the draft forensic audit was presented to management on the 17th of January 2020, an additional five internal audits have been performed by our internal audit team.

“These audits were in addition to other ongoing statutory audits for financial statements, Deloitte forensic audit for 2015-2019, Zacc (Zimbabwe Anti-Corruption Commission) audit on fuel procurement and security payments and ZIMRA (Zimbabwe Revenue Authority) audits.

“In total, NetOne currently has nine ongoing audits which is quite excessive. These internal audits as per my understanding have been requested by the NetOne board of directors.

“Management is concerned by the fact that the additional five internal audits were requested by the board and commenced immediately after the Deloitte draft forensic audit report was presented to the board and management,” Muchenje wrote.

He continued: “Management’s view is that these audits are currently disrupting and negatively affecting NetOne’s commercial turnaround which to date has been successful. To prove this, under current management NetOne’s monthly revenue increased by 977% from $9,9 million in February 2019 to $107 million in December 2019.

“NetOne is the only profitable telecommunications company in Zimbabwe with our hyper-inflated profit after-tax for the year 2019 higher than $500 million which compares very well to the loss after-tax of $1,2 billion reported by Econet in half year results for August 2019.

“Unfortunately, due to the disruptive impact of these audits among other interference from some board members, our monthly revenue for January 2020 for the first time since February 2019 went down month-on-month by 6%.”

Such upheavals and consistent Government interference in SOEs (State Owned Enterprises) are certainly not an attractive proposition to any potential investor.



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