Zesa to retain Powertel

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POWERTEL Communications, a unit of Zesa, plans to recapitalise through vendor financing amid indications that the group will hold on to the asset despite stiff competition in the telecommunications industry.

Report by Victoria Mtomba

Vendor finance is a loan from one company to another which is used to buy goods from the company providing the loan.

Zesa Holdings has four subsidiaries — Zimbabwe Power Company, Zimbabwe Electricity Transmission and Distribution Company, Zesa Enterprises
and Powertel — following its unbundling.

Speaking before the Parliamentary Portfolio Committee on State Parastatals, Zesa Holdings Limited chief executive officer Josh Chifamba said the group diversified into the cash-spinning telecommunications sector because of the embedded assets that the company holds.

“It (Powertel) requires capitalisation and we are talking to vendors to raise vendor finance. There is a lot of value and potential in the power sector,” he said.

“The answer to offload Powertel can be a yes or no because we can get some value by offloading it.

“But for business strategy, I don’t think it’s good to offload it at the moment. We will hold it.”

Chifamba said there was need to invest in the company as it was in a competitive sector where other companies were performing very well.

Meanwhile, the Zesa boss said the country will increase power generation to 1 500 megawatts (MW) this year from the current 1 200MW produced through various power generations that have been lined up for this year.

The country’s power stations have an installed capacity of 1 950MW and the demand for power was at 2 200MW.

“We have plans to increase the output. We will have the fifth unit from Hwange working today,” Chifamba said.

“We had four units that were working. We will be getting number six working by the end of March.”

He said the country’s newest power station Hwange was built 30 years ago with most developed economies setting up new energy facilities after every five years.
Experts attribute this to the country’s huge debt overhang estimated at $10,7 billion.
The country, according to Chifamba, has since 2009 invested $180 million for refurbishments.

6 COMMENTS

  1. The decision to sell Powertel is logical and should be pursued in the medium to long term. It is clearly outside the mandate of Zesa. What they need to do is to capitalize the company and seek a strategic investor or sell the entire shareholding. The money realized from the sale can be used to partly retire the massive debt as reported in the different article on this blog.

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