Industry Trend Analysis - Regulatory Uncertainty To Complicate Consolidation Efforts - MAR 2018
BMI View: The Tanzanian government has claimed ownership of Airtel's local unit. We believe increased regulatory pressures in Tanzania, as well as an increased state involvement, will weigh negatively on a market already hosting more players than it can sustain. We anticipate Airtel exiting the market altogether as industry risks mount .
President John Magufuli has thrown into question the validity of historical deals, claiming that Airtel Tanzania belongs to state-owned fixed-line incumbent Tanzania Telecommunications Company Limited (TTCL). Officially, the Tanzanian government owns 40% of Airtel Tanzania, with the remainder owned by Bharti Airtel, following a string of investment transfer deals dating back almost two decades. Reinterpreting the terms of those deals sets a dangerous precedent for a market already coming to grips with increased operational costs resulting from deeper regulatory scrutiny.
The case can be traced back to 1998, when Cellnet was launched under TTCL's full ownership. In 2001, TTCL was partly privatised, with Celtel International and Germany's Detecon obtaining a 35% stake from the government of Tanzania. In 2005, Celtel Tanzania was separated from TTCL and was later sold and rebranded to Zain in 2007 and was ultimately acquired by Airtel in 2010. The government now claims that the decisions by the former TTCL management and the Tanzanian Treasury Registrar to privatise the company were mired in irregularities. The government also claims it invested USD82mn in the early stages of establishing the company that has not been recouped.
|Tanzania Outperforms Region|
|Tanzania Vs Regional Risk/Rewards Scores, Q118|