After mixed messages recently about the cash-strapped state owned carrier, Zambia’s government has finally categorically denied media reports that it has decided to sell Zamtel.
In fact according to the ITWeb Africa news service, the country’s Vice-President Mutale Nalumango has gone much further, insisting that Zamtel will be recapitalised and not sold, the aim being eventually to enable it to compete favourably in the market.
Despite earlier reports of an unnamed equity partner, Science and Technology Minister Felix Mutati has insisted that so far no such no equity partner has been identified. However, Mutati was also quoted in June as saying that the government will not give the company the US$265 million recapitalisation it needs.
Since then he has suggested that a working committee would aim to investigate the viability of the company and recommend the way forward, saying: “At the end of the day, we want to save Zamtel and that is our only objective.”
That may be easier said than done. Zamtel’s working capital deficit is estimated at around US$59.8 million, and maintenance of current infrastructure, expansion and modernisation will add to the bill. Last week’s reports also mentioned outstanding debts of $175 million and a recapitalisation of at least US$265 million simply to stay afloat.
There’s also an issue with the sale of Zamtel in 2010 to Libya’s LapGreen Networks for US$252 million by Zambia’s previous administration. The present administration insisted that the transaction was illegal and soon afterwards took over Zamtel’s operations. In 2017 the Libyan Investment Authority, (LIA), the investment arm of the Libyan government, took the Zambian government to court for abruptly reversing the sale of Zamtel without compensation.
The debt owed to Libya could add to Zamtel’s outgoings: between US$380 million and $500 million, depending on which news outlet is quoted and also depending on how much the government has so far paid.
However, given the eye-watering debts it is carrying, it’s hard to see how Zamtel can be made into a going concern without a massive injection of cash, not to mention a complete overhaul.