Tanzania: Compulsory listing of telcos on Stock Exchange still an issue

Mergers, Acquisitions and Financial Results

Mobile phone operators in the country will continue to engage the government so as to convince it to amend the newly signed Electronic and Postal Communications Act in their favour. Their resolve follows the signing into law the bill whose certain sections they disputed as unfavourable to their operations.

The two leading telecommunications firms' CEOs told The Citizen in separate interviews in Dar es Salaam yesterday that they were yet to see the new law and that they will continue consulting the government if contentious issue have not been addressed.

"Our stand is that we will continue discussing with the ministry, regulator and other stakeholders to reach an amicable conclusion," said Zain Tanzania managing director, Khaled Muhtadi. He insisted that the new law would have a negative impact on investments in the telecommunication industry.

Muhtadi noted that his company has for the last seven years invested about $600 million (Sh780billion) and according to him "this is because the investment environment was appropriate at that time." However, his Vodacom Tanzania counterpart Dietlof Mare, said for the time being they have nothing to do but adhere to the new law.

"The bill has been passed by parliament and the President has assented to it; so we will just have to follow the new law as required," conceded Mare. Among other things, the mobile operators are contending the section in the law which compels them to publicly float their shares at the Dar es Salaam Stock Exchange (DSE) three years after starting their operations in the country, subject to requirements by the Capital Market and Securities Act.

In disposing of local shares listed or registered with the DSE, the companies will have to sell their local shares to Tanzanians according to procedures prescribed in the regulations.

Currently, the three leading mobile companies operating in Tanzania are listed on foreign stock exchanges. Vodacom is enlisted on the Johannesburg Stock Exchange of South Africa, Zain (MTC) appears on the Kuwait Stock Exchange and Tigo (MIC) is on a US stock market.

The mobile phone operators had earlier sought President Jakaya Kikwete's intervention, saying the Electronic and Postal Communications Bill, 2010, which has since been signed into law, was detrimental to their operations.

They sent a letter early this year through their umbrella organisation, the Mobile Operators Association of Tanzania (Moat), seeking an audience with the President to have contentious clauses removed from the Bill. In the letter, the Moat members said the Bill reflected Tanzania's inconsistency on policy matters.

"It is our view that as a country, Tanzania needs consistency, certainty, transparency and stability in such major policies in order to realise meaningful investments," the mobile phone company CEOs noted in their letter to President Kikwete.