18 March 2018

Tanzania: Key Issues in Bharti, Govt Talks Over Airtel Shares

Dar es Salaam — The controversial transfer of government shares in Celtel Tanzania from TTCL Corporation to Mobile Systems International Cellular Investments (Tanzania) B.V (MSIT) in 2005 is the largest item on the agenda during ongoing talks between the government and Bharti Airtel.

Specifically, however, talks would revolve around how the government recoups its investment in the mobile firm that were not reflected in the ownership structure.

The Tanzanian team in the negotiations is led by the Minister for Constitution and Legal Affairs, Prof Palamagamba Kabudi, while Bharti Airtel's delegation is led by the company's Legal department head Mukesh Bhavnani.

The government claims its shares were transferred "irregularly" in 2005 from the then Tanzania Telecommunications Company Limited (TTCL) now known as Tanzania Telecommunications Corporation (TTCL Corporation), to the Mobile Systems International Cellular Investments (Tanzania) B.V (MSIT).

Celtel Tanzania, which was later in 2008 rebranded as Zain, was established in 2001 as a mobile phone subsidiary of TTCL after the state telecom company was partially privatised. The mobile phone was created with a capital of $82 million that the government claims was released entirely by TTCL.

During the partial privatisation, the Mobile Systems International Cellular Investments (Tanzania) B.V (MSIT) and Detecon Consortium took over the management of TTCL. But it was in 2005 when TTCL and Celtel Tanzania were legally separated that things got murky, according to documents seen by The Citizen.

MSIT (which was later rebranded to Celtel International) acquired 35 per cent in TTCL out of the blue. In addition it ended up being the majority shareholder in Celtel Tanzania, according to documents.

All this 'magic' happened in a two-hour meeting in August 2005 of the then TTCL's board of directors.

The bone of contention is that Celtel International never repaid the loan to TTCL Corporation. Efforts by The Citizen to get comments from the negotiating parties proved futile but futile.

Reached for comments, the director of Presidential Communications Directorate, Mr Gerson Msigwa, said information about what transpired during the discussions will be issued in due course.

"You will be informed after the discussions have been concluded. For the time being let's give the negotiating team space to continue with discussions," he said in a telephone interview this week.


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