End to controversial Airtel ownership, State, investor seal mutual deal
Eight months of negotiations with Bharti Enterprises finally yielded, with the government sealing a good deal with an Indian telecom firm, yesterday.
Under the deal, the government will receive dividend for the first time in almost ten years since Bharti, which trades in the country as Airtel, started operations in Tanzania.
In the new agreement, Bharti Airtel agreed to pay 10bn/- to the government as compensation for failure to give dividend in all those years.
India’s leading telecom conglomerate concurred with Tanzanian government in payment of 1bn/- monthly for five consecutive years, effective yesterday.
Bharti Enterprises Founder and Chairman Sunil Bharti Mittal signed the historic agreement with the Minister of Constitution and Legal Affairs Professor Palamagamba Kabudi at the State House in Dar es Salaam.
Professor Kabudi signed for the Tanzanian side as President John Magufuli, among other top government officials, watched.
Speaking after inking the deal, Professor Kabudi said the government’s shares in Airtel Tanzania have increased to 49 per cent from the initial 40. Following the changed ownership structure, Bharti Airtel now controls 51 per cent.
“It was not easy to convince the Indian team to lower their shares, they were at best in arguing their case but we are glad that we finally raised our stake without buying them,’’ said Professor Kabudi, adding that the increase of Tanzanian shares was an issue that delayed the negotiations.
Under the new deal, both parties agreed to have at least three Tanzanians into Bharti Airtel’s seven-member board, with the government assuming powers to appoint the board chairman out of the three Tanzanian representatives.
Bharti Airtel top management, which initially never featured Tanzanians, should now have at least one Tanzanian specifically heading the technical department. The parties agreed to have the Tanzanian government appointing the Chief Technical Officer who will be employed by Airtel Tanzania.
Ideally, the Chief Technical Officer is in charge of all operations of the company, including technology transfer and procurement activities of the company. Others in the management are Chief Executive Officer (CEO) and Chief Finance Officer.
It was also agreed to have all company documents prepared afresh. That entails rewriting of the company’s new constitution and administrative guidance, joint collaboration in all the company operations, collaboration in the use of infrastructure between Bharti Airtel and TTCL Corporation as well as clearing all accumulated debts that the company owes the government, among others.
President Magufuli paid tribute to the new agreement, describing it as a clear example of the kinds of investments he wants for the country.
He said Tanzania remains the best place to invest, thanks to its polite people, political stability and the best business environment.
“This agreement is victory for all Tanzanians,” said the president, acknowledging the great work by “Our intellectuals who negotiated this deal to its conclusion.”
Mr Mittal also appreciated the new deal, which he described as historic. He pledged to continue supporting various government executed projects, saying to begin with, his firm will provide one million US dollars (about 2.3bn/-) in Corporate Social Responsibility (CSR).
Dr Magufuli tasked the Kabudi-led team last March to negotiate the deal that will see both Tanzania and Bharti Airtel benefiting and eventually strengthening the country’s communication sector.
Bharti Airtel Chief Legal Officer Mukesh Bhavnani led the investor’s team to the negotiation table.
President Magufuli’s directive followed the report submission by Finance and Planning Minister Dr Philip Mpango on the controversial ownership of the telecom company—Airtel Tanzania.
Dr Mpango argued the government had proved beyond doubt that privatisation of Tanzania Telecommunication Company Limited—the current TTCL Corporation—to Celtel, Zain and now Airtel was marred by serious irregularities.
After the minister’s probe report, the president formed the Kabudi team to initiate negotiations, which came up with the mutual verdict for all parties.
