The Zambian government has frozen Libya's 75 percent stake in the Zambia Telecommunication Co. (Zamtel) in order to enforce U.N.-backed sanctions. The sanctions come in the wake of unrest that has engulfed the Libya, aimed at unseating President Moammar Gadhafi.
The Zambian government has not yet officially taken over management of Zamtel. In Uganda and Rwanda, however, the governments have not only frozen Libya's assets but taken over management of the telecom companies owned by the Libyan government through its telecom investment arm, the LAP Green network.
Libya had moved to compete with major telecom players in Africa, including Airtel, Vodacom and MTN, but the country's investment and expansion plans have now been shattered.
Hans Paulsen, an LAP Green manager running Zamtel, said the company will continue to operate normally and that the Zambian government will be overseeing its affairs.
"No dividend will be paid out until such a time when the matter is resolved. But I'm optimistic that the Zambian government that owns 25 percent stake in the company will help ensure that the company's operations are not affected," said Paulsen at a media briefing last week.
Paulsen said Zamtel will this year establish more than 500 base stations to cover about 80 percent of the country with its mobile network. He said the company would undertake an aggressive expansion strategy despite being linked to Gadhafi's regime through LAP Green.
Zamtel, Paulsen said, has already signed an agreement with the Chinese ZTE to roll out the base stations.
Zambian President Rupiah Banda, however, said the Zambian government only has money enough to run the company for one year through its 25 percent share. Banda said the Zambian government had no choice but to implement the decision by the international community to freeze all assets and investments belonging to Libya.
"We don't know what will happen after that one year but we can only hope that the problem in Libya will have been sorted out and Zamtel continues operating," said Banda at a press briefing.
LAP Green owns 75 percent of Zamtel after buying a $257 million stake following the Zambian government's failure to recapitalize the company.
Over the past few years, LAP Green has pushed to further invest in the region's telecom market. Two years ago, LAP Green signed a $300 million financing agreement with the Industrial and Commercial Bank of China to fuel its expansion program in Africa through acquisitions of financially struggling incumbent operators.
But with a number of key countries breaking economic ties with Libya, analysts now fear there is a dark future for Zamtel and other networks across the region.
The Libyan Investment Authority Portfolio network, under LAP Green brand, is a pan-African mobile operator that has a presence in many African countries including Zambia, Uganda, Rwanda, Ivory Coast and Niger.
South Africa, Africa's largest economy, was the first in Africa to impose sanctions against Libya last month and froze all assets belonging to Gaddhafi and his government. Improvements to LAP Green's infrastructure have been funded by investments in Europe and America. But with the sanctions, the Libyan government is unable to borrow money from any lending institution for the further investment and expansion of its networks.
As in Zambia, LAP Green's operations in many African countries have not yet started turning a profit.