BHARTI Airtel of India, which recently completed a US$10.7 billion purchase of Zain African operations from Kuwait’s Zain Group, could be heading into troubled waters in Tanzania, as the government there has reportedly blocked its shares.

The Tanzanian government announced last month that it would receive $11.2 million and also retain its 40 per cent stake in Zain Tanzania, following the sale of the company to Bharti Airtel.
Tanzania was the only operation where government has retained a stake.

Local Press reported on Friday showed that Bharti Airtel has offered a $11 million bid to buy off the 40 per cent stake owned by the government in Zain Tanzania, but the government now maintains it will not sell its holding, and will instead look to buy back the majority of the company that it does not currently own.

The latest news is the Tanzanian government was working on an acquisition strategy of its own and accused management of the company of not fully communicating the sale agreement.

According to Telegeography News, the Tanzanian government claims the acquisition of the Zain Tanzania operation by Bharti Airtel contradicted the partnership agreement between Zain Tanzania and national fixed line operator Tanzania Telecommunication Company Limited (TTCL).

Alongside its stake in Zain Tanzania the Kuwait group owned 35 per cent of TTCL.

However, an agreement signed in April 2010 saw Zain agree to sell its TTCL stake back to the government in order for TTCL to be wholly owned by the state.

In Zambia, 20 per cent of shares in Zain Zambia are held by minority shareholders through the Lusaka Stock Exchange (LuSE), and Bharti Airtel has indicated that it would be asking the minority shareholders to sell their stake to the Indian investor,

Now, in addition to wanting to reacquire Zain’s stake in Zain Tanzania, the Tanzanians want to make TTCL a 100 per cent government-owned firm, hoping the company would be able to compete with private operators in the local market.

The Ministry of Finance and Economic Affairs permanent secretary permanent secretary, Ramadhan Khijjah, was quoted as saying Zain Tanzania’s management did not fully communicate information about the Bharti Airtel deal to the relevant government authorities.

Earlier this month, the country’s Minister for Higher Education, Science and Technology, Peter Msolla, told the National Assembly that the government was still in talks with Bharti Airtel concerning the sale.

In a debate on the country’s budget for the 2010 -11 financial year, Professor Msolla said: ‘We met with the company’s officials on June 21 to discuss the sale.

“We have told them to finalise the evaluation of the assets so that we can determine whether the payment made to us is satisfactory,” he said.

The minister said: “Since the government has shares in the company, it is imperative that it be involved in transactions regarding the sale. The shares we hold in the company are assets that ensure our role is not underestimated.”

He said a big mistake had been made and being a shareholder, the Tanzanian government’s involvement in the company’s transactions was a must.

“As far as I am concerned, we are not done yet. They cannot say they have sealed a deal when we are still carrying on with talks,” Prof Msolla said.

He was answering questions on whether government was involved in the negotiations for the Zain take over, and whether the country would benefit from the takeover of the company.

Bharti Airtel international chief executive officer Manoj Kohli, who was in Zambia on June 24, said the investor would welcome minority investors who would want to remain in the company when it makes a mandatory offer to LuSE next month and September

The members of parliament also wanted to know why the government had not offloaded the shares on the Dar es Salaam Stock Exchange (DSE), since they passed a law requiring all mobile phone operators to list on the exchange.

In Zambia, 20 per cent of shares in Zain Zambia are held by minority shareholders through the Lusaka Stock Exchange (LuSE), and Bharti Airtel has indicated that it would be asking the minority shareholders to sell their stake to the Indian investor,

Bharti Airtel international chief executive officer Manoj Kohli, who was in Zambia on June 24, said the investor would welcome minority investors who would want to remain in the company when it makes a mandatory offer to LuSE next month and September

Except for Sudan and Morocco, Bharti Airtel has acquired Zain Africa operations in all other African countries where it operates, which include among others Burkina Faso, Chad, Congo, Democratic Republic of Congo (DRC), Gabon, Ghana, Kenya, Tanzania, Uganda and Zambia .

[Times of Zambia]

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19 COMMENTS

  1. Zed should learn from this. That’s how the so called ‘investors’ infect poor economies.

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  2. Our neighbors are learning to protect their interests.

    Meanwhile back in Zed, we do whatever the foreigner says even if it means that Zambians won’t own anything. We are in economic bondage and our leaders are blind to the reality.

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  3. at least they are people out there who try to do what is right……ZAMTEL problem was the government,not the company or workers….the shepherd is to blame,the company became a laughing stock

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  4. Lessons to learn from Tanzania. Can Dollar Zasila learn something from Tanzania. Can we send our ministers for education in Tanzania. Ooh no, you cant teach an old dog new tricks. Then what? Proud Tanzanians government, and inferior Zambian government.

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  5. As usual #1 to #3 speaking based on a headline than read a story, full of emotionalism and populaism of the PF cadre mentality. Let me break it down for you ZAIN ( Share code CELTEL) is a public company listed on the LuSE and it debuted at about K400 and even at some point this stock fell to as low as about K300. Today it is trading at K690. If you have held this stock for the last two years, that would be a 70% profit return. Any investor in the world would kill for that return in this difficult market around the world. Also ZAIN clearly said they will make an offer to Zambians holding the stock and usually an offer is around 20 to 40 % of the premium value which is K690. That is a lot of upside..to be continued

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  6. In the story, they also said if you don’t want to sell you can remain a minority share holder and you will be entitled to a dividend and you can even say later in future.

    The problem with you PF cadres is that when ZAIN did an IPO, you were busy insulting our late president LPM. But there are smart Zambians who sunk their money into this thing and today they are sitting pretty, and my friend the cellular revolution has just began. The data side of this business means more money in the pockets of those that invested.

    Hard luck for all you peddlers of 90 days economic miracle and peddlers of the ideology of popularism and emotionalism. Keeping insulting while we mint cash. We don’t mind, let see where insults take you. By the way am not liquidating my position in ZAIN.

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  7. So fellow investors in ZAIN , Share code CELTEL on LuSE, don’t accept the offer. There is more upside in this stock. We are all going to access the internet on the phones. The phone will be a true connected device that will bring the majority of our people online and not the PC as people thought. ZAIN is also in the processing of rolling out the 3G network and that will be a game changer and a cash print press for this company. The gravy train has just started dishing out real stuff. But again if you sell or accept the offer, enjoy, making 100% profit on your investment in two years is not bad at all. It is still good money. Enjoy it.

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  8. # 5, 6, and 7 MMD Chief…. What you are saying makes a lot of business sense, but I wish to remind you that CELTEL shares on LuSe once reached an high of K 805 per share. If you compare that with the current price, then people who invested at that price have incurred a loss over the two year period. The new investor should offload more shares onto the market instead of making this mandatory offer. We are likely going to lose confidence in the market. We should be encouraged to own shares in the company.

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  9. #8 it is probably foreigners who bought at that price. Most of us Zambians bought during the IPO and the IPO price was k430. Those Zambians who sold at K805 must be laughing all the way to the bank now. Am not sure if I support the issuance of more shares, it will dilute the value of our shares and erode the dividend. I think there are enough shares to go round. You just will have to decide whether you will invest for capital growth or the dividend. If going for the later, this is not the time. Cheap money has already been made. Wait till the things settle and you could get them at a cheaper price. Or pray for some bad news that will cause others to panic sell. This is a good company , you can’t go wrong.

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  10. Now thats what we want from people running government . no further comments apart from contemplating changing citizenship. Mambo vipi

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  11. # 1 to 4. A question would you like Government to hold shares in such companies?? What benefit do you envisage from this. Goverrnment has shares in ZCCI, i dont know ehat benefit accrues to the company. Is the intention to dilute the profit motive?? just asking!!!
    I also would ask how the Tanzanian Governments holding of shares and or refusal to sell off shares is / willl/ has benefited the Tanazian people. Please enlighten me

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  12. Well # 1 to 4 and # 10. \do you want government to hold shares in ” strategic compANIES” ? If so why? what benefit would we as Zambia have? Zambia has shares in certain mines through ZCCI. What benefit accruing to us ? what benefit should accrue??

    Back to tanzania , what benefit is there for the people from the holding of the shares? what benefit will be there if the Government does not sell the shares??

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  13. #8 and #9, that is what I call mature contributions, debating issues objectively without insulting each other. Well done.

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  14. the gov being a shareholder, means you have an insider knowledge about the company, you can demand any info and be provided. then interest of the country are kept in check, otherwise these “investors” will even invet in poison so long as it makes money

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  15. Bharti Airtel is a Money spinning company, rather then Telecom company.

    They will spin all the money from african countries & send it to India.

    Africans will continue to remain poor:-?

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