More Africa NewsZambia: Job cuts inevitable as Zamtel urgently seeks US$265m to stay afloat

June 30, 2022by myles0
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Zambia’s state-run operator Zamtel needs a recapitalisation to the tune of US$265-million in order to survive, according to the country’s Minister of Science and Technology Felix Mutati.

Mutati said the government will not recapitalise the company because it has other financial priorities, adding that about 90% of Zamtel’s revenue is being utilised for administrative expenses.

The Minister added that Zamtel has a working capital deficit of approximately ZMK1-billion, with its balance sheet unable to support maintenance of current infrastructure, expansion and modernisation.

He said the company urgently needs to invest in its co-networks, infrastructure and other business support services, and must find a solution to the situation, beginning with securing the requisite US$265-million.

“No matter how well-written a letter requesting funding might be, the government is unable to finance the company because there is no resource at the Ministry of Finance. So if it means we need to cut some limbs in order to find a solution for Zamtel and to save it, so be it because that is where the solution for the company is,” said Mutati.

In a related development, the company’s Managing Director Joshua Malupenga announced to staff that the government has already secured an equity partner to run the company.

Malupenga did not disclose the name of the company or its origin, and said only that it was a foreign company and that the government wanted to on-board the partner before August this year.

Malupenga was quoted by Lusaka Times, as saying, “A decision has already been taken and we have to be ready for the changes that will come with the new equity partner. Job losses are inevitable. The target is August. They want the process to be quickened because Zamtel is making losses and is now a burden.”

In December 2020, the International Monetary Fund (IMF) asked the Zambian government to sell Zamtel as a condition to release a US$1.2-billion economic lifeline.

The financial organisation made the sale of Zamtel a requisite because of the substantial amount of money it said was being used to recapitalise the company in order to make it viable.

This month, the IMF said it was closer to giving Zambia the requested bailout package because of the austerity measures the government has implemented including the removal of fuel subsidies.

Source: IT Web Africa

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