Bharti Airtel's expansion plans in Africa are running into resistance in Tanzania, where the government has an acquisition strategy of its own.
Bharti Airtel, India's largest mobile services company, said last month that it completed the acquisition of the African operations of Mobile Telecommunications Co., known under the Zain brand. The deal involved Zain operations and shares of companies in 15 countries.
After the deal closed, Bharti Airtel initiated an US$11 million bid to acquire the Tanzanian government's 40 percent stake in Zain Tanzania. The Tanzanian government, however, maintains that it will not sell its share of Zain Tanzania but will instead buy back the majority of the company that it does not currently own.
The Tanzanian government claims that the acquisition of the Zain Tanzania operation by Bharti Airtel contradicted the partnership agreement between Zain Tanzania and the Tanzania Telecommunication Co. (TTCL)
In addition to its stake in Zain Tanzania, Zain owned a 35 percent share of TTCL. However, an agreement was signed in April this year for Zain to sell back its stake in TTCL to the Tanzanian government in order for TTCL to be wholly owned by the Tanzanian government.
The Tanzanian government had sold the 35 stake in TTCL more than five years ago after failing to recapitalize the company and expand its operations to compete with private operators. Now, in addition to wanting to buy Zain's stake in Zain Tanzania, the Tanzanian government wants to make TTCL a fully government-owned firm, hoping the company will be able to compete with private operators in service provision.
The permanent secretary of the Ministry of Finance and Economic Affairs, Ramadhan Khijjah, said Zain Tanzania management did not communicate to the Tanzanian government information about the deal with Bharti Airtel.
"The Tanzanian government is still consulting the Tanzania Communication Regulatory Authority (TCRA) and the Business Registration and Licensing Agency on the matter," Khijjah told Computerworld Zambia.
This means that the Zain Tanzania takeover bid has not yet been finalized despite Bharti Airtel having completed the payment of $10.7 billion for the acquisition of Zain's operations in African countries including Zambia, Tanzania, Kenya, Nigeria and Uganda.
by: Michael Malakata
IDG News Service |