Tanzanian Telecommunications Company Limited

active

In March 2001, a consortium of MSI Cellular Investments (renamed Celtel International in January 2004) and Detecom (a subsidiary of Deutsche Telecom) purchased 35% of the shares of the state-owned incumbent Tanzanian Telecommunications Company Limited. The consortium paid an initial US$60 million to buy the shares and made a commitment to increase the total number of telephone connections from 162,000 to 800,100 over the term of the four year exclusive license. The amount was almost twice the amount bid by the other two interested consortia. MSI was expected to invest US$900 million over 10 years in infrastructure and was immediately given management control of TTCL. A second payment of US$60 million was dependent on the financial performance of TTCL for the year 2000. After disagreeing on the year-end 2000 accounts, both the Government and MSI agreed to be bound by independent "Expert Determination". Mr John Ellison, a Partner in KPMG LLP of London, was appointed by both parties in 2003 as the independent expert to determine issues where the Government and Celtel International differed insofar as TTCL's year 2000 accounts were concerned. His report was sent to both parties on 29 January 2004 and was the basis of the agreement reached in June 2004. Based on the report, it was agreed that Celtel International was to make an additional US$4.96 million payment. In 2004, TTCL was investing US$32 million to install a prepaid system and a new dual band service (ADSL) technology. By end 2004, the company's wholly-owned mobile subsidiary, Celtel Tanzania, held a 25.6% market share with 504,000 subscribers and competed with Vodacom, Mobitel and Zantel. However, in August 2005, Celtel Tanzania was separated from its parent and was to operate as an autonomous legal entity. The government agreed to sell 25% of its shareholding in TTCL's former mobile subsidiary to Celtel International at a price of US$28 million, resulting in the government owning 40% of the shares in the new Celtel Tanzania and Celtel International owning the remaining 60%. The government then lent the proceeds of US$28 million to TTCL for capital expenditure. The two shareholders also agreed on the structures of the two Boards of Directors and on the management of the two independent companies. The Government was to have a majority on the TTCL Board and Celtel International was to have a majority on the Celtel Tanzania Board. An independent private sector management company was to manage TTCL and Celtel International was to continue to manage Celtel Tanzania, both under new management agreements. The Government and Celtel International (100% owned buy MTC of Kuwait as of March 2005) were, however, to maintain their original ownership stakes in TTCL, at 65% and 35%, respectively. The number of fixed-line customers dropped to 136,000 in 2004 from 200,000 in 2002. By March 2005, which marked the end of TTCL's exclusivity period, TTCL's fixed lines stood at 300,000, with 148,360 subscribers countrywide. The Tanzania Communications Regulatory Authority (TCRA) was considering granting a licence that was to allow Zantel (the fixed-line and mobile operator on the nearby island of Zanzibar) to rollout its operations to Mainland Tanzania effectively by February 2006. In mid-2006, it was widely reported in both domestic and foreign media that a Canadian firm, SaskTel International, had won a bid over six other companies to manage TTCL. There was widespread union opposition, stalling the process. No resolution had been announced to the impasse as of December 2006, as TTCL expanded its customer base to 150,000 subscribers. Management contract 2007-2010 by Sasktel. Afterwards? Problem with user numbers? Capex 2011 based on Bharti airtel annual report: parent capex * subscribers Bharti Airtel country subsidiary / subscribers of total Bharti Airtel Group (220.878m) Capex 2012: Ibid (241.1million)