Vodacom Tanzania local shareholders seek way out

LOCAL shareholders of Vodacom Tanzania Limited are seeking permission from the Tanzania Communications Regulatory Authority (TCRA) to sell their 35 per cent stake in the telecoms firm to foreign investors, it has been revealed.

Well-placed industry sources say the local shareholders have already officially contacted TCRA about the matter.

Vodacom Tanzania Ltd, the biggest mobile phone services company in the country in terms of subscribers, is currently owned by Vodacom Group (Pty) Limited of South Africa (65 per cent) and Mirambo Limited of Tanzania (35 per cent).

TCRA was notified in April this year of the 35 per cent stake takeover by Mirambo Ltd, a company registered under local laws. Before Mirambo came into the picture, local shareholders of Vodacom Tanzania Ltd were Caspian Construction Limited (19 per cent) and Planetel Communications Limited (16 per cent).

However, industry sources now say that since last year, a tug-of-war has emerged between between Vodacom Tanzania’s local shareholders and TCRA on the question of who to sell their shares to.

It is understood that the local shareholders have been increasingly pressing for TCRA’s go-ahead to sell to foreign investors.

Under the Tanzania Communications Licensing Regulations of 2005, Vodacom and all other telecoms companies operating in the country are required to have at least one local shareholder with a minimum 35 per cent stake in the firm, in order to become eligible for a telecommunication licence.

According to one informed source within the Ministry of Communications, Science and Technology.’’The local shareholders of Vodacom Tanzania believe that there is no ongoing obligation for the company to retain 35 per cent local ownership after being granted a telecoms licence to operate in the country.’’

’’The local shareholders believe they are merely required to inform TCRA about the change of ownership, since they consider that the 35 per cent local ownership requirement is just for licensing purposes,’’ the source added.
Other well-placed industry sources have told THISDAY the local shareholders feel that restrictions stopping them from selling their shares in the telecoms company to foreign buyers have made it difficult for them to access loans from international financial institutions.

It is stated that the local Vodacom Tanzania shareholders, becoming increasingly impatient with the situation, have begun to challenge TCRA’s position on the matter even more aggressively than before.

’’The local shareholders want their 35 per cent stake in Vodacom Tanzania to be made readily transferable to any interested foreign investor. However, TCRA continues to oppose this because the law states that telecoms companies should have some local ownership,’’ said another source.

Insiders say one or all of the Vodacom Tanzania Ltd local shareholders is seeking a loan of more than $20m (approx. 24bn/-) from a foreign bank, using their shares in the telecoms company as collateral.

The bank is believed to have set strict conditions that the 35 per cent stake in Vodacom Tanzania should be available for purchase or ownership by a non-Tanzanian company, before it issues the loan.

But according to TCRA officials, to allow this could easily result in Vodacom Tanzania becoming 100 per cent foreign-owned.

Sources have told THISDAY that the request of Vodacom Tanzania’s local shareholders to be allowed to sell their shares to foreign investors is currently being discussed at high levels of government, including within the Ministry of Communications, Science and Technology and the Attorney General’s chambers.

This Day