Last month’s successful privatization of Zamtel by President Rupiah Banda’s Government is great news for Zambians, delivering the promise of improved telecom industry competitiveness, cheaper phone calls, high-speed broadband internet, and ultimately, a real growth catalyst for Zambian businesses. We asked Director General of the Zambia Development Agency, Andrew Chipwende, for the facts behind one of Zambia’s most successful privatizations – and what consumers can look forward to from the new Zamtel:
Why did you privatize Zamtel?
AC: As Zambia’s only fixed line operator, and one of just three mobile operators, Zamtel is central to our country’s communications infrastructure. As such, it has served Zambian consumers and businesses for many years. However, as competitors have entered the market its old business model and aging infrastructure have struggled to keep up. We needed to identify a way to modernize Zamtel’s service and invest in the development of more advanced telephone networks, for all Zambians. In short, we wanted to reposition Zamtel so that it can realize its true potential.
Is this good news for Zambia?
AC: Definitely! President Banda has made Zambia the first African country to deliver a telecoms privatization of this nature. At US$257 million it is the most single successful privatization in Zambia’s history. This value when looked at in terms of enterprise value per subscriber, we have achieved a price of US$1,770 per subscriber, well above recently completed African telecom transactions such as Burkina Faso, Mali, Ghana and Niger telecoms. We have pioneered a new approach to make this work and are setting an example for other countries to follow. Zambia has always led the way in privatization but we are now setting new standards for ourselves. We have shown that we can make a deal like this work – to the benefit of all Zambians while at the same time making it attractive for investors to pay a premium. This is a boost for those who want to work and create jobs here.
Will Zambians get a better service?
AC: Absolutely. This is at the very heart of this privatization. This transaction was done as a component of far broader telecom sector reform measures by Government. You will already have seen the advertising from Zain and MTN offering cheaper international calls. The sector reforms introduced in parallel with Zamtel’s privatization have already contributed to reducing international calling costs by 70%, and we expect local interconnect rates to also follow suit. And that’s just the start. We have also helped to support a quicker roll out of the fibre-optic network across Zambia so that most urban and rural areas will have access to high speed broadband within the next few months.
What would have happened if you hadn’t privatized Zamtel?
AC: Zamtel was insolvent and owed a significant amount of money to foreign suppliers and banks. By June 2010, it would have defaulted on some of its interest and principal repayments which have triggered massive cross defaults.. This would have resulted in lenders calling in their loans, suspension of vital network programmes, reclaiming of vital equipment and eventually the company’s effective collapse through receivership, then liquidation. Workers would have lost their jobs, most likely without any compensation, and customers would have lost their service. If Zamtel had failed, the impact on telephone and internet services would have been extremely negative – it could have set the country back several years. But still investors would have been able to buy the residual assets of the company at rock bottom, break-up values.
Will the Zambian people have to pay for Zamtel’s debt?
AC: No. Under the terms of the privatisation deal we have ensured that all debt is repaid from the proceeds of the sale, that all Zamtel workers receive generous payouts and that money is made available to upgrade and improve Zamtel’s service for customers.
What is happening to Zamtel’s workforce?
AC: Under the terms of the agreement Zamtel’s whole workforce will receive redundancy packages, but many will be re-employed, as around 800 jobs will be re-created in Zamtel. Everybody employed in Zamtel will receive 3 months’ payment for each year they worked at Zamtel, plus other gratuity payments. This money will go straight into employees’ bank accounts. The net effect is an injection of nearly US $100 million into the Zambian economy. We have worked closely with the National Union of Communications Workers, who have been very supportive of our approach, and of the package provided to Zamtel’s workers. With all the skills available in Zamtel, many opportunities are available to be seized in outsourcing of services not just in zamtel, but other telecom and ICT companies. Our Micro, Small Enterprise Division at ZDA is at hand to mentor those that want to venture into business.
Where has all the money gone?
AC: Some of the US $257 million released through this privatization has gone to pay off Zamtel’s debt. Close to US$ 100 million will be paid directly to Zamtel’s workers as their redundancy packages, within 60 days of the completion of the privatization. US$ 64 million will be channeled back into Zamtel to contribute to the recapitalization of the company. Further amounts will go towards resolving Zamtel’s unfunded pension deficit. In short, the Government has used the vast majority of the proceeds from the transaction to contribute to the future of the company and its employees, rather than just pocketing the money and walking away – as has been the case in many other cases across Africa.
Who owns the new Zamtel?
AC: LAP GreenN won the bid to take a 75% stake in Zamtel, after a competitive and transparent bidding process. LAP GreenN is headquartered in Uganda, and is owned by Libya Africa Portfolio which has investments in banking, tourism, property development, oil and gas. It has a strong track record of delivering successful turnarounds of state-owned telecoms businesses, in Rwanda, Uganda and Ivory Coast among others. GRZ will also own 25% shareholding and by virtue of this, exercise veto rights on key strategic matters through the shareholders agreement. Ultimately, once the company is turned around, it is GRZ’s intention to offer its shares to the general public through a public flotation. At that point Zamtel will become a publicly listed company.
How can you be sure that LAP GreenN will invest in improving Zamtel?
AC: President Banda’s Government has retained a 25% stake in Zamtel, and has seats on the board of Zamtel. Moreover, as part of the shareholders’ agreement between LAP GreenN and the Government, Zamtel is required to meet business plan targets, so we can be sure that it is well run and offers customers a good service. But it’s also important to remember that it’s in LAP GreenN’s interests to turn Zamtel into a strong, sustainable and successful business. The Government has an excellent relationship with LAP GreenN, and we’re confident that Zamtel’s future, with their contributions, is a bright one.
So what is the future for Zamtel?
AC: In short, growth and development. There are exciting plans in place to upgrade Zamtel’s services and improve its infrastructure so that all customers can enjoy lower call costs, more reliable service, and faster mobile and fixed Internet connections. Thanks to President Banda’s commitment to saving Zamtel we are confident that it will go from strength to strength, and be held up as a shining example of how a telecoms operator, and an important national asset, can be turned around to the benefit of the whole population. The positive results, which are already beginning to show, will speak for themselves.
[IT News Africa]
Rubbish. We await and see what will follow? If there is or was corruption in the sale and its sniffed out! The plunderes will have to be punished. Nothing like it was a good deal. It must be a good one for the country & not even individual ministers due to corrupt practices surrounding the sale.
Rubbish deal. The true picture of Zamtel sale will be judged next year. How can all the so called educated MMD robbots sale , Zambia`s asset to another government( Gadaffi`s Libya). What happens if Gadaffi is removed from power? Can Chi RB answer this simple question?
this is a success story for zambia. zamtel was on its deathbed and needed urgent injection of funds. the workers of zamtel are happy and we all look foward to the goodies to come from this great sell. only pipo who dont want to see good things come to zambia will be critical and these can only be failures in kaponya party PF ati kano nibo muletasha. lookat zanaco its now the best bank in zambia standing on solid grounds. RB and MMD have a heart for this country not those who want to enter plot 1 at all costs even if it means cheating the weak and dumb kaponyas
you can only believe in lies from cobra ati more cash in your pockets ati development within 90days. if you can believe such naked lies then thats how simple your mind is you believe in easy things. thats why the majority of zambians can never be cheated by kaponya PF. only the minority get fooled ati they will get rich if PF takes over. keep dreaming guys and dolls
YAYA WERE ARE YOU WE NEED YOUR CONSTRUCTIVE CONTRIBUTIONS. RB AND HIS MMD ALSO THEY HAVE NOW CLOGGED UP ROADS IN WOODLANDS CHALALA MAKING THEM IMPASSABLE JUST BECAUSE THEY ARE PUTTING UP TAR ROADS. OKAT THE TARRING OF TAR ROADS IN CHALALA LOOK AND APPEAR PROFFESSIONAL BUT I KNOW BA KAPONYA BALYA NJIKWITE ARE GNASHING TEETH IN ENVY AND RAGE. VIVA CHALALA HOME OF CIVIL SERVANTS ITS NOW BEING BAPTISED WITH GOOD ROADSTHANKS AGAIN TO MMD. NOW 90 DAYS FUTILE PROMISES
IWE KA KALINOSKY petr@3&4. Dont be dumbfounded ma man! Who is talking about Sata or PF?Who also said we will get rich when Sata assumes office at plot 1? We are already doing it by ourselves. The thing at the heart of the matter is we need a govt that would not loot the little natural resourses by themselves & their fellow short chinese. Look at what is happening at KCM. I ve got friends there & it makes me sick like many other zambians out there that this govt still lives in the medieval era of one man authority. May be your are a student & someone is just sponsoring you on taxpayers money? I can understand because by yourself your are redundant. Bulldull head!Dont also try to bling in opposition because even this article is a made up one by LT. No interviews resonates like this above.
The article has no writer & what do your expect? Fwaka uko kwine!
A first for what, failure or success?
This question and answer session sound stupid… Can GRZ get an press statement other than talking to one of the beneficialy this mother F*k*** Andrew
What successs you son of the bitch, a lot will be known come December 2011, chi RB and his sons are in a hurry to fill up their pockets. Why can’t we ask ourselves as to why we are the first to sell the national telecommunicatios company. Zamtel has 2500 employees and only 800 will be retained and what happens to the other 1700 people and their dependents. This is the most foolish Govt that cannot defend the interests of its citizen. Come down here in SA and see how these guys protect their citizens interests. People in the Mines have been crying of poor conditions and nobody does not want to give them an ear, Where on earth do you bring in expatriate with BA qualification when UNZA churns out in excess of 500 BA graduates that are roaming the streets. No wonder nabakaponya umuchinshi…
This so-called AC sounds like Rupiah praise singer! The question is how much did RP Capital put in RB’s pocket?
RB is just looting this Country. Govt was one of the Institutions that was owing Zamtel large amounts of money. And the Govt could have helped Zamtel to recapitlise if they wanted to. But since RB and his sons wanted to enrich themselves they sold Zamtel without following procedure with the valuation for instance. RB has been carrying out business deals at State House instead of letting the Zambia National Procurement Authority do their work, talk about the Philips contract to mention one
President Mwanawsa and the looting of K838 billion from the Zambian National Oil Company, 4 Oct 2005
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Can we please learn from others as Digga says on his post on ZWD of 08/17/2010 at 16:57
He says
I’m sitting in Luanda.. Have been working here since 2008.. indeed 3 months away from here and you’d be lost next time you’re back. But the reason for this is because Angola have a vicious empowerment law that does not permit foreign investment without minimum local/black ownership content (at lest 20% shareholding).. and that goes for the oil companies. Secondly and most importantly, Angola DO NOT ALLOW FOREIGN COMPANIES TO RAPE THEIR RESOURCES.. DIAMOND INDUSTRY is controlled by goverment who through parastal company INDIAMA own and control 50% of all DEBEERS Mines, in addiditon to otehr mines fully owned and controlled by INDIAMA like CATOCA..
Digga continues
When it comes to oil that accounts for 85% of GDP, ANGOLAN Govt have only concessioned out 50% of Available blocks to FOREIGN FIRMS like EXXON. CHEVRON , TOTAL and have reserved ALL onshore and other huge reserves soley for the OPERATION of it’s National oil company called SONANAGOL (Sociedade Nacional Petroleos de Angola) who run their own Oil rigs and revenue come back straight to the RESERVE BANK OF ANGOLA.. No Mwanakatwe tax bull$hit stories or Mutatai Lumwana rubbish . no.. The 2009 Financial results for SONANGOL highlights were REVENUE-29 Billion dollars PROFIT AFTER TAX – 3 billion dollars..
Lastly Digga posts
SONANGOL has even won a bid to develop oil fields in north of IRAQ… On oil being pumped by foreign firms , the have decent royalties per barrel, something like $5/barrel.. So the construction loan someone talked about for $5billion was actually $21billion dollar cash + construction deal for long term supply of oil by SONANAGOL…. Basically are implementing the KK model.. But our Govt are scared of developing its own mines nad maximising returns to Zambia. Even ZAMTEL tehy are scared.. Where KK triumphed and built stuff.. its simple.. COntrol your minerals and you Construct.. You don’t and give foreign companies, then you get shagged and have delapidated roads like most of Zambia. kitwe etc
HOW HAS ZAMBIA BENEFITED FROM THE ZAMTEL SALE????
Agreeably, the ZAMTEL sale is Africa’s most fooolish endevour ever taken by a government.
When ifwe bakaponya come in power, you, the educated will be on your way running for your lives. No wonder you are so scared of Sata. Our friends use education to benefit their country; but you lot have used education to rape Zed of its resources. Dora Siliya Banda has been in the forefront to out our families out in the cold because of Zamtel. Wait, you will suffer from indigestion; for now, enjoy; but you lot are the minority. My GETO we are the majority; you will not protect tuma riches you have acquired dubiusly. Fyonse ni timel now its your time. Ours will come!!
BREAKING NEWS
Christians see the inside heart and spirit of these pro-gay and lesbian anti-Christ in PF. Can they preside over our Christian nation of Zambia?
“People believe that Jesus will come, but I don’t believe that myself. So, that is a none issue,” Sata’s hand picked and appointed PF secretary General Winter Kabimba said
“Thanks to President Banda’s commitment to saving Zamtel …………………… The positive results, which are already beginning to show, will speak for themselves”.
What more can I say?
From what I gather in this interview, the net gains on the ZAMTEL sale is below $60m. Valuing all its assets, especially the buildings and telecoms infrastructure, can we honestly call this privatisation a success?
Jack Jones 10#
There is nothing wrong with being the FIRST African Country to do so, if the deal is very tangible and will benefit the consumption in Zambia.
This is like telling the American people as to why the USA became the FIRST Western Country to allow its First Black President. Was that a risk? No, I do not think so, but some may say otherwise.
We are living in a Cutting Edge Generation and that requires Telecom Infrastructures that can drive t Business, Services, Schools, Transportation, Health facilities and so on. Information Technology in modern times has become the Core Factor of running any Business.
We are all scattered all over the world right now blogging on LT, using on this tool because it’s powered by Information Technology, which is driven by a Telecom company in the background. I suppose it’s Zamtel themselves not sure….
Currently all African countries with Old Technology are getting ripped off by Telecom & Satelite Carriers from the west. This is why we pay heavy prices of Phone, Satelite Transmissions and the list goes on
If we merge every change that comes in the country with politics, we are doomed. Some things are better off left in the Business World.
Finally, you cannot compare the richness of South Africa to Zambia. That is not feasible at all. We are a poor nation with a very low Credit Rating
BA NYINENWE UTUSUNDILO FIMO MULETASHA.IYI ILIFYD BWINO
Please Zambians stop kidding yourselves. The biggest telecommunications deal in Africa was completed in Ghana. The Ghanaian govt sold for Ghana Telecom for a whooping $900m. Go to Ghana today and see how advanced their telecommunications infrastructure is. There are internet cafes all over the place with speeds to die for. You try searching for Ghananian websites and you will see that most of their bloggers are home based not like Zambian sites that are full of the diaspora. If Ghana and Kenya are in the Third World then definitely Zambia is a Fourth World country. Zambia and Zambians will never advance because they have an overinflated view about themselves.
We are not a serious lot in Zambia. In the next 50 years , we will be under a new form of colonisation. We do not own any strategic assets ! What is the wisdom of selling such a jewel like Zamtel just to staff benefits . That is foolishness of the highest order.
We seem not have any clue on how wealth is created. Wealth is created when you have in your possessions assets – tangible and otherwise- that creat wealth