12 January 2018

Tanzania: Talks On Airtel Ownership Set to Start - Govt

Finance and Planning minister Philip Mpango said yesterday that the government and Bhati Airtel had agreed to start talks on repossession of 60 per cent of Airtel Tanzania shares.

Dr Mpango said this when presenting to President John Magufuli a report compiled by a special probe team on the company's acquisition processes. The move seeking to repossess the 60 per cent shares currently held by the Indian multinational Bhati Airtel comes after Dr Magufuli directed that processes that were used to acquire the company be revisited. The probe team was formed to investigate the legality of Airtel Tanzania shares held by Bhati Airtel, which has a 60 per cent stake, with the remainder being held by the Tanzania government. "We have discovered that the privatisation of Tanzania Telecommunications Company Limited (TTCL) to form Celtel and before being acquired by Zain and now Bhati Airtel was done improperly and against the law, regulations and procedures," Dr Mpango said.

He added that the government of Tanzania was seeking to engage Bhati Airtel in dialogue. The goal is to have the latter assign the 60 per cent it holds "illegally" to the Tanzania government.

"Let me make it clear that what we have found out is not good. The country was drawn into a bad deal and we lost a lot of money. What we are doing now is to ensure that Tanzanians benefit from what is rightfully theirs," he said.

Reports show that the government placed Airtel Tanzania under TTCL late last year following the "dubious" acquisition of part of the telecommunications firm.

The government thereafter formed a special probe team to look into the matter with a view to pinpointing the irregularities that occurred when assigning the TTCL shares to Airtel, which was operating under the brand name Celtel Tanzania at the time.

According to available information, during the TTCL privatisation, Celtel-International was in partnership with Detecon of The Netherlands. In the event, the two companies initially invested $60 million in TTCL in February 2001and was allotted a 35 per cent stake in TTCL.

In the new partnership with TTCL, Celtel International agreed to be bound by independent "expert determination" in the aftermath of poor financial performance by 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 Tanzania government and Celtel Tanzania, TTCL's shareholding structure remained unchanged - with the government of Tanzania continuing to hold 65 per cent of the shares, while Celtel International held the remaining 35 per cent.

In the aftermath, Celtel Tanzania's structure was changed so as to comply with the government's decision to sell a 25 per cent stake to Celtel International for $28 million.

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