29 May 2003

Zimbabwe: Masiyiwa Battles to Retain Econet Wireless Ltd. Control

Harare — ECONET Wireless Holdings Limited (EWHL) founder Strive Masiyiwa has launched a frantic $8 billion bid to increase his stake in the listed telecommunications giant in which his shareholding has plummeted from 62.84 percent in 1999 to 26.1 percent, market sources said yesterday.

The deal, under which TN Financial Services has been appointed the lead financial advisor, is being handled by Intermarket Stockbrokers, a subsidiary of Intermarket Holdings Limited.

Sources said Masiyiwa wants to surrender 14 percent of his shareholding in Mascom Wireless, a Portuguese-owned Botswana telecommunications group. The other six percent in the Botswana company is owned by EWHL.

In return for that stake, Masiyiwa wants his shareholding in EWHL increased by over 25 percent, which would boost his shareholding in the company to a comfortable majority of 51 percent or more.

Officials at Intermarket yesterday refused to give details of the deal, referring all questions on the issue to Masiyiwa.

Tawanda Nyambirai, TN Financial Services chief executive officer, equally refused to shed light on the deal saying: "No one responsible would discuss a transaction involving a listed company prematurely because it's share-price sensitive".

Under the deal, which would require shareholder approval because of its magnitude, EWHL would also increase its issued shares from 863 845 099 to 1.1 billion.

"It's a material transaction that would require shareholder approval because it will take his shareholding to about 50 percent. The question is 'what's his interest in selling his stake in forex-earning Mascom for an increased stake in the local operation?'," a source said.

Mascom Wireless commands 70 percent of Botswana's market with a subscriber base of over 250 000, more than the 60 000 capacity market analysts had predicted when the Botswana government licensed two cellular phone operators about five years ago.

The latest move by Masiyiwa could be designed to safeguard his interest in the local operation against an expected hostile takeover by a financial institution with a significant exposure to the telecommunications group.

Masiyiwa, who moved to South Africa in 2000 after EWHL shareholders approved an international expansion strategy in the core areas of satellite, fixed and mobile telephone and Internet services, now heads Econet Wireless Limited (EWL), based in South Africa but incorporated in the UK.

Although an offer was made to give EWHL a 50.48 percent stake in EWL, the move hit a snag after local regulatory authorities demanded the local group should instead be awarded 100 percent equity in EWL.

The Reserve Bank of Zimbabwe has demanded that funds received from the exchange of equity in the group, and hived off in the form of fungible Old Mutual shares should be repatriated first before it can sanction the EWL- EWHL share offer.

Copyright © 2003 Financial Gazette. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.