CELTEL WALKS OUT ON TTCL - IT MAY BECOME CARRIER'S CARRIER

Telecoms

The privatised Tanzania Telecommunications Company Limited (TTCL) will revert to government management in the next three months following failure by Celtel to fulfil its obligations. Sources in Dar es Salaam said last week: "This is not an issue any more and the four-year contract that gave powers to the Dutch investor to manage TTCL ended on February 22."

The government has given Celtel three more months to wind up business and finalise handing over. TTCL is primarily a fixed line company with a nationwide network. The privatisation of TTCL raised a controversy when MSI/Detecon (as the investor then was) proposed to buy it at USD120 million, almost twice the amount bid by the other two interested consortia.

MSI/Detecon also committed itself to install 800,000 telephone lines in four years ending last week, which would have raised connectivity from TTCL's 162,000 lines. By last week, which marked the end of TTCL's exclusivity period, TTCL's fixed lines stood at 300,000, with 148,360 subscribers countrywide.

The investor bought 35 per cent shares for a total of USD65 million. The money was largely re-invested in Celtel cellular company, a TTCL subsidiary.

The source further revealed that the government and the investor were locked in intense negotiations over the split of shares in the cellular firm.

But a well-placed TTCL official told The EastAfrican: "The fate of these negotiations is still unknown because there are many basic issues that have not been agreed upon. It's confusion," he said. As of last week, no official statement had been made by the government, TTCL or Celtel. However, it is evident that the two sides have disagreed on the shares split in the cellular firm that is owned by Celtel International.

Although the MSI/Detecon management has not made public its decision to abandon the four-year deal, sources said the investor's intentions are to disengage itself totally from the fixed lines company TTCL to concentrate on the more profitable cellular phones business.

The source further said Celtel International "wants to pull out of TTCL and it made known its intention to the government last November (2004)." Celtel International also wants Tanzania to propose its share-price in Celtel Tanzania so that it can buy out the government entirely.

According to the source, also in the offing is the formation of the National Carrier of Carriers (NCC) under TTCL to manage excess capacity in the fibre-optics cables currently used by Tanesco, Tanzania Railways Corporation (TRC), Songas Limited and Tazara. The excess capacity will be leased to clients.

TTCL chief executive officer George Mbowe would not comment on the TTCL-Celtel split, but said Celtel Tanzania has started paying back the USD65 million capital to TTCL. "The capital was inter-company debt and Celtel is paying back," Mr Mbowe said.

The East African