IHS Global Insight Perspective
The transaction is expected to close by the end of June 2010.
The government plans to sell the remaining 25% take and could launch an initial public offering through the Lusaka Stock Exchange.
The privatisation process has met with some resistance from the opposition, and the main opposition leader, Michael Sata, has reportedly said that he would re-nationalise the operator if he wins the election next year.
The Zambia Development Agency (ZDA) has announced that the government accepted on 5 June 2010 LAP Green Com’s offer of US$257 million for a 75% stake in Zamtel, according to Dow Jones, after the ZDA received cabinet approval.
The government invited bids last year for a 51-75% stake (see Zambia: 11 August 2009: Zambian Government to Sell 75% Stake in Zamtel). Out of an initial field of 30 potential bidders, the ZDA shortlisted eight in October 2009: 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, and Libya Africa Portfolio (LAP) Greencom and LAP Green Networks. Of these eight, four submitted applications by the 23 December 2009 deadline (see Zambia: 22 October 2009: Zambia Shortlists Eight Operators for Stake in Zamtel). BSNL then dropped out of the running, followed by Altimo, which withdrew after completing due diligence and ascertaining that such a purchase would not benefit Altimo shareholders, leaving LAP Green Networks and Unitel/Angola Cables (see Zambia: 14 April 2010: Russia's Altimo Withdraws from Race for Zamtel).
Outlook and Implications
Fixed-line incumbent Zamtel is deploying a national fibre-optic backbone, and also owns mobile operator Cell-Z and the ISP Zamtel Online. Zamtel currently has 95,000 fixed lines and Cell-Z has some 161,000 mobile subscribers, according to Agence France-Presse (AFP). In addition to the purchase price of US$257 million, LAP Green Com will provide funds for network expansion. Dow Jones reports this figure at US$127 million, and AFP at US$62 million.
The privatisation process has met with some resistance from the opposition, and AFP reports that the main opposition leader, Michael Sata, has said that he would re-nationalise the operator if he wins the election next year (see Zambia: 30 December 2009: Zambian Opposition Against Privatisation of Zamtel). Meanwhile, the president of the Zambian Congress of Trade Unions (ZCTU) has said that the group supports the privatisation of Zamtel (see Zambia: 5 January 2010: Zambian Congress of Trade Unions Supports Zamtel Privatisation). According to the Times of Zambia, ZCTU president Leonard Hikaumba said in an interview that privatising Zamtel is in the best interests of its employees and is the best way to prevent the operator from collapsing.LAP Green Networks is 100% owned by Libyan African Investment Portfolio, an investment arm of the Libyan government. The operator has operations in six countries—Côte d'Ivoire, Gabon, Niger, Rwanda, Togo, and Uganda—and also bid unsuccessfully for stakes in Telkom Kenya and Ghana Telecom. LAP Green Networks acquired a 69% stake in Uganda Telecommunications Ltd (UTL) in April 2007, an 80% stake in RwandaTel in October 2007, and a mobile licence in Sierra Leone in April 2008 (see Uganda: 13 April 2007: LAP Takes Control of UTL; Rwanda: 15 October 2007: LAP Green Com Wins 80% Stake in RwandaTel; and Sierra Leone: 14 April 2008: Regulator Issues Two More GSM Licences in Sierra Leone). In Côte d'Ivoire the operator has a holding in Oricel Green, and in Niger the operator holds a stake in Sonitel and Sahel Com (see Niger: 16 February 2009: Government of Niger Rescinds Sonitel Privatisation).