Tanzania: Revealed - Govt to Lay Claim to Airtel

Photo: Daily News
Airtel Headquarters in Dar es salaam, Tanzania.

The government is set to lay claim to full ownership of Airtel Tanzania Limited, a move that will likely draw a legal battle with the joint owners of the telecommunications company.

The Citizen has learnt from impeccable sources within government that the state-run Tanzania Telecommunications Company Limited (TTCL) will stake the claim on behalf of the government any time now.

According to our sources, the move by the government is informed by insider reports from TTCL contesting the corporation's shareholding within Airtel Tanzania Limited.

TTCL's top brass, The Citizen has learnt, have made a case before the government to push for a retake of what it considers its rightful share in the telecoms company, now third in market share after Vodacom Tanzania and Tigo.

"The die is cast and TTCL will soon stake claim to Airtel Tanzania Limited. The corporation has made up a case showing that government's shareholding in the mobile company formerly trading as Celtel Tanzania was 'shortchanged,'" said one of the sources in the Ministry of Works, Transport and Communications. According to the sources who requested for anonymity due to the sensitivity of the matter, TTCL argues that its share ownership and investment in Celtel Tanzania running into billions of shillings was not commensurate with returns over the years.

The Citizen understands that TTCL is raising queries with the manner in which the shareholding structure in Celtel Tanzania changed hands to give a formerly minority shareholder control of the company which has since been resold and rebranded.

It was not immediately clear if the government has already made a formal claim against Airtel Tanzania management on this move that will be unprecedented in the recent history of the telecommunications sub-sector.

As of now, Airtel Tanzania is owned by the government of Tanzania through TTCL (40 per cent) and Celtel Tanzania BV, an affiliate of Zain Africa BV which was acquired by Bharti Airtel International in November 2010.

Efforts to obtain comment from the top TTCL management or the minister of Works, Transport and Communications Prof Makame Mbarawa were futile by the time of filing this report yesterday. Airtel Tanzania communication department's pledge to obtain comment from the company's management had also not yielded any information.

The TTCL's case is being built using records traced back to November 3, 1998, when the Cellnet Company was launched under TTCL's full ownership.

Cellnet operated until May 7, 2001 when it was rebranded to Celtel Tanzania, again under the ownership of TTCL which owned the entire operating infrastructure installed at a cost of $5 million.

The company would later be sold and rebranded to Zain and therafter as Airtel Tanzania. Subsequent decisions by the then TTCL management and board of directors, as well as, the Treasury Registrar reportedly handed control of the mobile firm to private investors in what TTCL is now arguing is on free-ride ownership at its expense. The corporation claims it invested $82 million in the early stages of establishing the company.

A new law was recently passed in Parliament that saw TTCL revert into a fully public owned corporation with an added role to play a greater role in the telecommunications sector. As of now, TTCL has a market share of 0.85 per cent in the telecommunication industry in Tanzania.

There has also been a behind-the-scenes battle between the government and Bharti Airtel on the impending floating of Airtel Tanzania's 25 per cent shares at the Dar es Salaam Stock Market as required by law.

The two parties are yet to agree on how many shares each one of them should float for sale, a decision that is said to have delayed the decision for a public offer.

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