Tanzania Government Claims Ownership of Airtel
The management of Tanzania Telecommunication company Limited (TTCL) have started a move to repossess a local mobile firm Airtel.
This follows a directive by the country’s president John Pombe Magufuli to the finance minister to make a close follow-up on the ownership of Airtel in Tanzania.
According to Dr. Magufuli, Airtel is fully owned by the state company, arguing that there was an irregularity in switching the shares of TTCL to Airtel in 2001 when the firm was operating as Celtel Tanzania.
Speaking to journalists today, TTCL Chief Executive Officer clarified that at the moment, Airtel does not belong to TTCL.
“We want to retain our company (Airtel) of which its shares were shifted to the government many years ago ,”he emphasized
According to available information, during the privatisation of Tanzania Telecommunications Company Limited (TTCL), Celtel International was in partnership with Detecon of Germany and the two companies invested an initial $60 million into TTCL in February 2001 for a 35-per cent stake.
In the new partnership with TTCL, Celtel International agreed to be bound by independent ‘Expert Determination’ in the aftermath of a poor financial performance of TTCL. Based on this, Celtel International made an additional $4.96 million payment.
In early August 2005, Celtel Tanzania and TTCL were legally separated, allowing each to administer its own financial and business operations. In this new (duly signed) agreement between the Tanzanian Government and Celtel Tanzania, TTCL’s shareholding structure remained unchanged, with the government of Tanzania holding 65 per cent and Celtel International the remaining 35 per cent.
In the aftermath, Celtel Tanzania’s structure was changed so as to follow the government’s decision to sell a 25 per cent stake to Celtel International for $28 million.
Proponents of the TTCL takeover of Airtel argue that Tanzania was ‘shortchanged’ in these transactions and that Celtel’s investment wasn’t commensurate with the returns over the years.
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The President accused some officials of ‘dirty games’ of changing/selling the shares at ‘throw away’ prices, at the expense of national interest.
Parliament in Tanzania recently passed a new law that saw the previously privatised TTCL revert into a fully public owned corporation with an added role to play in the telecommunications sector.
TTCL plans to improve the company’s operations and extend services to reach remote areas. To achieve this plan, TTCL needs more funding from the government and the plan now is to do it after gaining 100% ownership.
Currently Airtel Tanzania is owned by the government of Tanzania through TTCL (40%) and Celtel Tanzania BV, an affiliate of Zain Africa BV which was acquired by Bharti Airtel International in November 2010.
Bharti Airtel recently denied rumours it was planning to exit its unprofitable markets of Kenya, Rwanda and Tanzania.
It has since entered into a definitive agreement with Millicom International Cellular S.A. to acquire 100 per cent equity stake in its Rwanda operation, Tigo Rwanda.
The acquisition is consistent with the company’s recent statement which denied the exit rumours and said ‘we are open to consolidation opportunities either through acquisitions or mergers, to create a viable business in these three (Kenya, Rwanda and Tanzania) markets.’
Operating in 15 countries across Africa, Airtel says it is committed to profitably serving its customers on the continent.
“We are also committed to the long term viability of our operations in two other countries i.e. Kenya and Tanzania, to ensure that in 2018 all our 15 operations in Africa start contributing positive margins and cash flows towards a healthy and profitable Airtel Africa,” Bharti Airtel Chairman, Sunil Bharti Mittal said.
The company is yet to issue a statement on the latest developments in Tanzania.