The Citizen newspaper writes that the deputy minister for Communication, Science and Technology, Mr Charles Kitwanga, has told the National Assembly that the government holds a 40% stake in local mobile network operator Airtel Tanzania (formerly Zain Tanzania). He went on to say that the remaining 60% of shares belong to Celtel Tanzania BV – an affiliate of Zain Africa BV which was acquired by Bharti Airtel International (Netherlands) in November 2010. Explaining the situation, Kitwanga said that India-based Bharti Group did not acquire ‘government invested shares’ when it struck a deal to buy the cellco several years ago. Rather, it procured shares held by Celtel Tanzania BV, which was one of the shareholders in Zain Tanzania (held through Zain Africa BV). The deputy minister made the clarification in response to a parliamentary question on why Tanzanians are not allowed to buy Airtel Tanzania shares through the Dar es Salaam Stock Exchange. Kitwange has explained that when the right conditions prevail, ‘Tanzanians will be mobilised to buy shares under special guidelines adhering to laws and principles to allow people’s participation in economic growth by purchasing shares in Airtel Tanzania’.
The question of Airtel Tanzania’s precise ownership structure has caused controversy in recent years. According to TeleGeography GlobalComms Database, although Bharti Airtel secured a deal to acquire the majority of Zain’s African assets in July 2010, the government of Tanzania subsequently claimed to have lost USD308 million by allowing the sale and in April 2011 the chairman of the Public Corporations Accounts Committee Zitto Kabwe said the government did not benefit from the transaction following the application of a weak structure that allowed Bharti Airtel to buy Zain Africa without considering shareholders in Tanzania. At the time of Bharti’s takeover of Zain’s asserts, the Tanzanian part of the transaction was delayed after the government disputed the move citing a previous agreement it had with Zain which would see it acquiring full control of the mobile operator. Although the Indian firm offered the government USD11 million in 2010 to buy out the state’s 40%, the Dar es Salaam government held firm and last December confirmed it has no plans to sell its 40% stake. At the time the Minister for Finance and Economic Affairs, Mustafa Mkulo, said his administration would not unload the shares because of the inherent profitability of the service. ‘We have decided to continue with you until further notice because there is no risk of losing our tax payers money … We want to still maintaining our dividend,’ he said.