Telecel Zimbabwe’s troubles are continuing, with reports from the country’s press that the smallest of the country’s three mobile operators is set to be placed under corporate rescue, a form of bankruptcy protection, due to serious financial distress.
A stark reminder of the depth of the company’s problems came in the form of a recent High Court application from the Communication and Allied Service Workers Union of Zimbabwe suggesting Telecel is insolvent and faces liquidation if no rescue action is immediately taken.
Telecel’s assets, as of December 31, 2021, were $1.5 billion (about US$4.1 million) against total liabilities of $24 billion (about US$66.3 million) .
In theory corporate rescue gives Telecel breathing space to sort out a rescue plan. But the local Herald newspaper reports that it only accounted for $2 billion (US$5.5 million) or 2.6 percent of the total revenue of $76 billion (US$210 million) for the whole telecoms sector in Zimbabwe last year.
It has also not invested adequately in 4G and 5G networks and workers have not been getting full salaries since January 2022. The number of permanent employees, meanwhile, has more than halved from 700 in 2015 to about 300.
There is also confusion relating to shareholdings in the company. But it’s hard to see what claims shareholders can make when there is no money and no clear plan to rescue the company, which, as we reported earlier this year, has also had issues like inflation and outages to deal with.