IHS Global Insight Perspective | |
Significance | The Zambian government is currently selling a stake of between 51% and 75% in Zamtel. |
Implications | Three operators, out of eight short-listed, submitted bids on 23 December. |
Outlook | The Zambia Development Agency will announce which of the three bidders will be invited to proceed to the second round of the bidding process on 11 January 2010. |
In December 2008, the government began preparations to privatise Zamtel, and during August Minister of Communications and Transport Geoffrey Lungwangwa confirmed that the government was selling up to a 75% stake in Zamtel. The remaining 25% stake will be reserved for Zambians.
The Zambia Development Agency (ZDA), the agency responsible for overseeing the privatisation, received expressions of interest from more than 30 potential bidders, and shortlisted eight in October (see Zambia: 22 October 2009: Zambia Shortlists Eight Operators for Stake in Zamtel):
- Telkom South Africa
- Mahanager Telephone Nigam Ltd (MTNL)
- Bharat Sanchar Nigam Ltd (BSNL)
- VimpelCom and Altimo
- Orascom Telecom and Telecel Globe
- Unitel and Angola Cables
- Portugal Telecom
- Libya Africa Portfolio (LAP) Greencom and LAP Green Networks
The three that then submitted bids on 23 December were Bharat Sanchar Nigam Ltd, Unitel and Angola Cables, and Libya Africa Portfolio (LAP) Greencom/LAP Green Networks (see Zambia: 24 December 2009: Three Foreign Firms Shortlisted for Acquisition of Zambian Telecoms Operator). The other five decided not to submit bids. The ZDA said that these three bids would be evaluated, and on 11 January 2010 it will announce which of them will be invited to proceed to the second phase of the bidding process.
Outlook and Implications
In his speech to Parliament during August, Minister Lungwangwa said that in its current form the operator was insolvent, and the government had decided to privatise it to save it from liquidation. Zamtel had an annual operational deficit of US$17 million, according to the minister, and liabilities of more than US$125 million as of December 2008 (source: Daily Mail newspaper).
Nevertheless, Zambian opposition parties and trade unions have criticised the privatisation of Zamtel, saying that the government should retain a larger stake in the company. "Those bidding for Zamtel are doing so at owner's risk", said Michael Sata, the leader of the Patriotic Front (PF), in an interview with Reuters. "The PF in government will reverse the decision to privatise Zamtel. Even if it is sold we will renationalise it."
Almost all of the privatisations of fixed-line operators in the region have attracted criticism from opposition and trade unions, and in some cases this opposition has been sufficiently strong to frustrate the process. In Ghana, for example, the leading opposition party National Democratic Congress (NDC) strongly criticised the sale of a 70% stake in Ghana Telecom, saying that the government did not get value for money. When the NDC subsequently came to power, it followed up on its campaign pledge and launched a review of the sale (see Ghana: 19 October 2009: Committee Report Recommends Renegotiation of Ghana Telecom Privatisation to Vodafone).