The Zambia Development Agency (ZDA) has drawn up a shortlist of eight potential bidders for the 75 per cent of the state-owned operator Zamtel that is being sold. The winners will have a major task before them if they are to make anything of their putative investments because, as Martyn Warwick reports, the operator is a throw-back to the days of the dinosaurs
The telecoms market is booming in several parts of Africa and more than thirty companies and consortia have indicated a serious interest in the privatisation of Zamtel, despite the fact that it is currently in a big mess.
In the end the 30 plus were whittled down to just eight companies that were adjudged to meet the complete "pre-qualification" criteria. They include Telkom South Africa, Portugal Telecom, Orascom Telecom, Altimo of Russia, Bharat Sanchar Nigam and Mahanagar Telephone Nigam of India, LAP Greencom of Libya and Unitel of Angola. There's some odd bedfellows there, to say the least of it.
The ZDA says the eight will be required to submit initial offers for between 51 per cent and 75 per cent of Zamtel by 23 December, with the winning bidders passing on to the next round in the process on January 11, 2010.
Currently Zamtel has just 161,000 mobile subscribers and 95,000 fixed-line customers. The telco was formed back in 1994 when the monopoly carrier, the Post and Telecommunications Corporation of Zambia was split up. The company is headquartered in Ndola but main network controls and switching facilities are in the capital, Lusaka. There are 94 regional exchanges. However, economic development in the country has been held back by a chronic shortage of both international voice capacity and bandwidth.
This is the second time the Zambian government has sought to sell part of Zamtel. Ten years ago, in what was perceived as a very half-hearted exercise designed only to raise a bit of hard a cash, the authorities tried to privatise 25 per cent of the carrier. It was seen as a particularly cynical ploy and attracted absolutely no interest or any bids.
Now the government has decided to sell the majority of the company but plans to maintain a 25 per cent holding but has announced that it "reserves to itself the right to sell this [25 per cent] through an initial public offering on the Lusaka Stock Exchange." You can see the dollar signs from here.
Zamtel is a problem child. To begin with, it is technically insolvent. As of year end 2008, the last time figures were made available, the company had liabilities of US$125 million, up by 25 per cent on the previous year 2008. What's more, in a classic illustration of the overmanning and poor financial management that has dogged and damaged so many African carriers, an astonishing 70 per cent of Zamtel's 2008 revenue of approximately $49 million was spent on staff costs. The company employs just 2.623 people. Do the sums.
Last year Zamtel had what it described as "an operational expenditure shortfall" of approximately $17 million which was made up by the government raiding the national exchequer and taking tax revenues to prop up the moribund company. The carrier is also a byword for operational inefficiency and continual and serious industrial unrest.
The fact of the matter is that has laid a mere 90,000 fixed telephone lines and has attracted just 161,000 mobile subscribers. Zambia's two other mobile operators have 3 million subscribers between them. The carrier also maintains a monopoly over international gateway services for voice traffic, and, as a direct result, has some of the highest international call tariffs in the world as well as some of the poorest quality international calls on the planet.
Now we'll have to wait and see if the lucky winner or winners can make a silk purse out of a sow's ear after buying a pig in a poke.
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