Powercom which is currently suffering losses of between $241,480 and $603,700 monthly, went to court in a move to save itself from the union with Telecom Namibia, hoping to stop their telecommunications company Leo, the country’s second mobile operator from being liquidated come end of the month.
A joint venture between Investec Bank and Nedbank formed Guinea Fowl Investments (GFI), which bought powercom.
The proposed transaction would have Telecom Namibia buy the company for $241,480 and in addition settle the outstanding debt of $28.9M.
Powercom would in-turn issue preference shares to both Investec and Nedbank, representing about $11.6M in return for writing off some $9.1M of its debt to the banks.
GFI drafted an application against the ruling made by Communications Regulatory Authority of Namibia (CRAN) on the subject of the $29.2M cash take-over by Telecom Namibia.
In June, CRAN approved the transaction with the agreement that private investors will be allowed to buy at least 25percent of Telecom Namibia. CRAN added that the condition was necessary as the Communications Act is aimed at encouraging private investments in the telecommunications sector.
GFI responded saying CRAN didn’t have the power to make this ruling terming their decision as “irrational, unreasonable, impossible to comply with, and also unlawful”.
GFI added that if Shafimana Ueitele, the judge preceding over the case did not bar conditions to the merger, they would want him to order the regulator to retake the decision within five days from the granting of the order.
GFI further added that if the decision is not discontinued and the ban to Powercom-Telecom Namibia transaction is not approved, it will have them liquidated and force them to cut a total of 151 workers, 116 of them being permanent.
CRAN responded saying that they cannot “be criticized and are not responsible” for the losses incurred because it is perfectly within its rights , adding that their decision will not be reviewed based on GFI’s liquidation.
In its written arguments, CRAN added that Nedbank and Investec wanted to relieve themselves of the financial burden arising from the losses made in GFI by transferring their control to Telecom Namibia in February this year.
CRAN said the transaction is just to shift control of the failing firm from the private sector to a public company, which will have to invest millions of taxpayers’ money to acquire private sector losses.
CRAN, established by the Communications Act 2009, is the official regulator of the Namibian communications, broadcasting and postal services sector.
