Zambia minister's resignation delays fixes for Zamtel

Legal issues and controversy surrounding Zambian national carrier Zamtel, which led to the resignation of Minister of Communications and Transport Dora Siliya earlier this week, mean that the beleaguered company's problems will not be resolved any time soon.

Siliya resigned because of issues related to the award of a contract -- to RP Capital Partners of the U.K. -- to evaluate Zamtel assets and liabilities. The evaluation is needed to pave the way for international operators to buy the company.

A tribunal that was set up to investigate the minister's conduct in awarding the contract found the minister guilty of breaching the country's laws regarding tender-offer procedures.

The minister's resignation on April 21 means that no international or regional operator can buy Zamtel until the evaluation process is properly handled and concluded.

Zamtel is in serious debt, which last year soured to US$75 million, while the company has failed to expand its mobile-phone subsidiary to meet the pace of its competitors in the mobile market.

Zamtel is a government-run communication utility company providing mobile, fixed and Internet services. But the company is at the verge of collapsing.

"The evaluation of Zamtel was an initiative from my ministry and would form the basis for government to find a lasting solution to the company," Siliya said after resigning.

RP Capital Partners started evaluating Zamtel's assets and liabilities in January after Siliya agreed through a Memorandum of Understanding (MoU) to pay the company $2 million. Siliya said the Zambian government wanted to position Zamtel as a commercially viable and competitive player in the Zambian telecom market through the engagement of a new equity partner to bring in new investment and managerial competence.

The new equity partner will need to overhaul Zamtel's business fundamentals, structure and work culture in order for the company to be competitive.

However, the minister allegedly ignored tender procedures and legal advice from the country's attorney general on what needed to be done before awarding the tender to RP Capital Partners.

The country's president, Rupiah Banda, said following the minister's resignation that he would now bring the MoU that was signed between RP Capital Partners and Siliya before his cabinet for discussion.