Zimbabwean authorities have renewed Telecel's mobile operating license, ending a controversy that could have resulted in the operator abruptly ending its presence in the Southern African region.

The Zimbabwe government had previously declined to renew Telecel's license, which expired in June, for allegedly refusing to abide by the country's foreign ownership law.

Telecel Zimbabwe is 60-percent owned by Egypt-based Orascom while the rest of the company is owned by a Zimbabwean consortium called the Empowerment Corporation. Russia's VimpelCom is the parent company of Orascom.

Zimbabwe's telecommunications watchdog, the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) said the operator's license could not be renewed because the company had not complied with the so-called indigenization law.

The law requires foreign companies to sell at least 51 percent of their Zimbabwe businesses to black Zimbabweans. Orascom officials traveled to Zimbabwe late last month to negotiate with the Zimbabwean authorities over the renewal of the license.

Telecel has now reportedly assured Potraz that it will comply with the indigenization law. Potraz has confirmed in a statement that it has renewed Telecel's license because of the commitment made by the operator to comply with the requirement to have a local majority shareholding in line with the indigenization law.

"It was expected that the license would be renewed after the elections were over because Zimbabwean president Robert Mugabe, who has won the elections, was determined to please voters by allowing them to buy majority shares in Telecel," said Edith Mwale, telecom analysis at Africa Center for ICT Development. The country's elections were held on July 31.

Telecel has to pay US$137 million to renew the license for a period of 20 years. The company has more than two million customers and is the country's second largest operator after Econet Wireless.

The move by the Zimbabwean government to renew Telecel's license has come as a huge relief to Telecel subscribers who over the past one month were not able to make calls to subscribers on the Econet Wireless platform.

Econet Wireless had suspended interconnection with Telecel on grounds that Telecel was no longer a holder of a valid operating license. Telecel has over the past few years struggled to keep its operations going in Zimbabwe following sustained differences with Potraz.

In 2007 the operator's license was cancelled by Potraz over the company's shareholding structure, but the cancellation was reversed after the company successfully contested the matter with the Zimbabwean government.

Media reports say however that VimpelCom is moving to sell the stake it has in Telecel via Oascom, due to the continuing friction with the Zimbabwean government.