The government of Tanzania wants its shares of Airtel back, because according to a probe ordered by President John Magufuli, the sale of the shares was not legal.
Government says”…there were irregularities in switching the shares of Tanzania Telecommunications Company Limited (TTCL) to Airtel in 2001 when the firm was operating as Celtel Tanzania…” and it is these shares that the government wants back.
Bharti Airtel maintains that it did no wrong and the sale and purchase of the shares was legal and followed all regulations and procedures.
Nonetheless, the firm has this week requested a seat down with the government to iron out creases surrounding the company’s share acquisition from Zain, a Kuwait based Mobile Telecommunications Co.
The two parties met at the start of the week and it is expected that Bharti Airtel attempted to impress upon the government the legality of the eight years old deal.
The deal has come to question following a probe into the transaction ordered by President John Magufuli. The results of the probe revealed that some 60 percent of the company’s stake was transferred illegally.
Despite Bharti Airtel maintaining that “…the deal was in full compliance and followed all approvals from the government…” this week, the firm was inclined to call for talks with the government.
The government responded in kind saying, “…the negotiations are aimed at reaching an agreement between both parties and strengthening the communication sector in Tanzania.”
At the sit down, the government team was headed by Minister of Constitution and Legal affairs Professor Palamagamba Kabudi and the Bharti Airtel team was is led by the company’s head of legal department Mukesh Bhavnani.
Outcome of the talks have not been made public as yet but the two parties are expected to reach an amicable resolution.
Back in January of this year, a government initiated probe raised questions as to the legality of the share sells of Airtel Tanzania.
The investigation discovered that the initial privatization of the company had dire irregularities that robbed the country of huge sums of money over the cause of the last eight years.
According to a statement from the President’s office, the deal “broke the law, regulations and procedure,” and “…what we saw was very dirty and terrible. In short, our country was conned and a lot of money was lost.”
This week’s media reports by Bloomberg quote an emailed Bharti Airtel statement that says; “We are requesting the honorable finance minister to share with us the specific findings or concerns so we can respond with facts from the records of the company.”
Further, “…we intend to work closely with the government of Tanzania and will take all steps necessary to resolve any doubts or concerns to the satisfaction of the government of Tanzania and all of the other stakeholders.”
Bharti Airtel’s ‘Misty’ Acquisition of Zain’s African Operations
As reported by Reuters in 2010, a USD 9 billion deal saw India’s Bharti Airtel complete acquisition of 15 of Kuwait’s Zain Group telecommunication operations across Africa. With that deal, the Indian firm became the world’s fifth biggest cellphone company by count of subscribers.
In Tanzania, Zain came into the picture three years earlier in 2007 when it acquired Celtel’s Parent Company MTC Group and seized its 35 percent shares in Tanzania Telecommunications Company Limited (TTCL).
With the deal closed, it was now Tanzania’s turn and according to Lusaka Times, the government announced that it will retain 40 percent stake in Zain Tanzania and further receive some USD 11.2 million following the sale of the company to Bharti Airtel.