Tanzania Telecommunications Corporation is likely to announce Friday an
official claim to the sole ownership of Airtel. FILE PHOTO | NMG
Tanzania Telecommunications Corporation, formally trading as
TTCL, is likely to announce Friday an official claim to the sole
ownership of Airtel, a move that is likely to rattle Tanzania’s telecoms
sector.
President John Magufuli added a new twist to
the matter on Thursday when he directed the Minister for Finance, Dr
Philip Mpango, to launch an investigation into the ownership of Airtel
Tanzania Limited.
Speaking in Dodoma, President
Magufuli said he wanted to know how TTCL shares in Airtel’s precursor,
Celtel Tanzania Limited, were offloaded.
'Dirty game'
“I
want you (Dr Mpango) to work on this immediately. There was a dirty
game on the transfer of shares which were owned by TTCL,” said Dr
Magufuli, adding that the minister had until January 2018 to report his
findings.
He
spoke during the laying of the foundation stone for the construction of
the National Bureau of Statistics (NBS) head office in Dodoma.
Dr
Magufuli’s stance that Airtel was owned by State-run TTCL before shares
were “irregularly switched” would add to the unfolding puzzle as the
two parties steer a legal battle over the control of the country’s third
largest mobile phone company, which briefly also traded as Zain.
Airtel’s
current ownership is divided between the corporation (TTCL, 40 per
cent) and Celtel Tanzania BV, an affiliate of Zain Africa BV, which was
acquired by Bharti Airtel International in 2010.
Details exclusively seen by The Citizen
reveal why the government is bullish about its ownership claim to
Airtel, with TTCL board chairman Omar Nundu scheduled to speak about the
matter Friday.
Their case, we can authoritatively
report, rests with deliberations of a two-hour meeting in August 2005,
which made significant changes to TTCL’s shareholding in Celtel.
Investment plan
The
meeting, attended by six TTCL board members, a lawyer and the company’s
managing director, also approved TTCL’s investment plan of $82 million
in Celtel Tanzania.
The TTCL investment, according to
the details, was $40 million in return for a share equity in Celtel and
the balance of $42 million in the form of a loan to Celtel to be repaid
in six months at 4.75 per cent annual interest.
The
meeting, which took place from 10am to 12pm, moved from converting part
of the TTCL loan into equity, then transferring the same shares into a
loan to Celtel and eventually dissolving the old partnership and
establishing a new structure that handed control of the company to
Celtel’s minority private investor.
To run the new
company (Celtel Tanzania), the meeting voted to move TTCL’s 65 per cent
share interest to the Treasury Registrar, who was retained as the sole
government representative in the Celtel’s board of directors.
To
facilitate the smooth movement of the shares and investment plan
between the two entities, the same meeting moved from being a TTCL board
and into a Celtel Extraordinary Board Meeting. At the end of the
meeting, all board members resigned and a vote was passed to approve new
names of completely new directors.
ALSO READ: Airtel denies it plans to exit Kenyan market
Unclear transfer
It
is, for example, unclear why the minority shareholder, Mobile Systems
International Cellular Investments (Tanzania) B.V (MSIT), was allotted
35 per cent of TTCL shares by the board during the transfer of its
shares in Celtel.
This would suggest that TTCL’s
capital investment was largely used to set up the mobile phone company
for returns which the current management is now arguing have not been
credited to its accounts.
Sources told The Citizen that the corporation was also claiming that neither the loan it gave out nor the interest earned had been accounted for.
“TTCL
was forced to borrow money from the government to foot the bills as the
agreement stated but to date no one knows how and when the Treasury
Registrar lost its 65 per cent majority in Celtel,” said one of our
sources within the Ministry of Communications.
The
source explained that a new set of articles of association adopted
during that board meeting is said to have robbed TTCL the voice to make a
decision or question its huge investment in Celtel Tanzania.
The
government has since rescinded one of the outcomes of the said board
meeting by buying out the joint minority investor in TTCL for a sum of
over TSh14.5 billion.
TTCL is now fully owned by the
state and the impending battle for control of Airtel Tanzania seeks to
give the corporation the footing it needs to make imprints in the
lucrative mobile telecommunications sector.
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