By CHRISTOPHER KIDANKA
In Summary
- For nearly two years, the government has been locked in a tug-of-war with mobile phone firms over adherence to the Electronic and Postal Communications Act (Epoca), which requires them to float at least 20 per cent of their shares on the DSE for citizens to buy.
- The companies have protested the requirement, saying that the stockmarket performance could impact negatively on the share prices.
- DSE executive director Moremi Marwa said that since the passing of the regulations, not a single telco had expressed interest to list on the stockmarket.
The Tanzanian government has been forced to amend a law that
required telecommunications companies to list on the Dar es Salaam
Stock Exchange, following strong opposition from the companies.
For nearly two years, the government has been locked in a
tug-of-war with mobile phone firms over adherence to the Electronic and
Postal Communications Act (Epoca), which requires them to float at least
20 per cent of their shares on the DSE for citizens to buy.
The companies have protested the requirement, saying that the
stockmarket performance could impact negatively on the share prices.
After the enactment of Epoca in 2010, a regulation to enforce
the law was prepared in 2011, but the telcos’ refusal to comply
necessitated rounds of consultation with the government.
Clause 79 of Epoca says: “Existing licensee of Network
Facilities, Network Services, Application Services or Content Services
shall... within three years from the commencement of this Act, and in
accordance with requirements of the Capital Market and Securities Act,
be required to offer shares to the public and subsequently list on the
stock exchange.”
Ian Ferrao, managing director of Vodacom Tanzania which boasts
12.4 million subscribers said that mobile phone operators argued that
before enforcing the law, the government was supposed to take into
account the pros and cons of mandatory listing based on the experiences
of countries that had followed that path.
The EastAfrican has been informed that after the
principle regulation was issued, four mobile companies — Vodacom
Tanzania (Vodacom), Bharti Airtel (Airtel), MIC Tanzania (Tigo) and
Etisalat (Zantel) — formed a consortium and hired Barclays Africa as a
consultant to study the market and weigh the pros and cons of listing on
the Dar es Salaam bourse.
Viettel which trades as Halotel and Smart were not yet in operation at the time.
The consultations resulted in the amendment of the principle regulation of 2011, deleting the requirement for mandatory listing.
The new regulation relaxes the requirement that is in principle,
aimed at empowering the locals and forging ways to make telecoms in the
country more accountable and transparent.
An official privy to the consultations told The EastAfrican:
“After learning from other countries, we found that when the locals buy
shares it does not necessarily translate into ownership of the
companies because most of them would wait for the shares to appreciate
and sell them to major companies.”
In view of this, it was proposed that companies that do not
comply with the listing requirement contribute to a fund that would
finance local projects.
Section 18B-(1) of the new regulation says: “Notwithstanding the
provisions of the regulation 18(1)(a), a holder of an individual
licence may, pursuant to the provisions of the Capital Markets and
Securities Act, list its shares on a stock exchange within the United
Republic but subsection 4 gives freedom to a licencee who does not
comply to contribute to a fund an amount equivalent to 0.6 per cent of
its gross operating revenue for sector development and promotion of
local ICT startups.
According to Epoca, all licensed telcos were supposed to list in
2013, and that by that time, the regulation was ready but the
enforcement of the law had been delayed due to consultations between the
government and mobile telephony companies.
DSE executive director Moremi Marwa said that since the passing
of the regulations, not a single telco had expressed interest to list on
the stockmarket
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