Govt: No Zain deal
By The Sunday Citizen Team
The takeover of Zain Tanzania by Bharti Airtel has not yet been concluded despite the Indian companys announcement early this week that it has completed its $10.7 billion acquisition of the Zain Group in Africa.
Two Cabinet ministers confirmed to the Sunday Citizen that the deal had not been finalised, as there were still issues that needed to be sorted out. However, none of them could reveal what is holding up the transaction, whose conclusion is eagerly awaited.
Communications, Science and Technology minister Peter Msolla said Zain and Bharti Airtel could not have sealed the deal without involving the government, which has a 40 per cent stake in the business. He said the two companies could not claim to have completed the multi-billion dollar deal, when its talks with Zain had not been concluded.
A big mistake has been made. We are shareholders and our involvement is a must. As far as I am concerned, we are not done yet. They cannot say they have sealed a deal when we are still on it, Prof Msolla told the Sunday Citizen in Dodoma on Tuesday.
Finance minister Mustafa Mkulo also said negotiations were still going on between Zain and the government, but he would not reveal the pending issues.
This matter has not been finalised. We are still in touch with them (Zain) and have not concluded any issues. Lets just leave it for now. Im still in touch with the company, Mr Mkulo said, when told that Bharti Airtel has announced the conclusion of the transaction.
Efforts to contact the managing director of Zain Tanzania, Mr Khaleed Muhtadi, for comment on the governments position failed yesterday. However, he had told the Sunday Citizen on Wednesday that the companys takeover would not affect the shareholding or involve the retrenchment of staff.
Mr Muhtadi said the rebranding of Zain to Airtel would be decided in the next few months.
Early this week, the Indian company announced that the governments in the 15 African countries, including Tanzania, where the company operates, had blessed its takeover of the Zain business in the continent.
We are delighted at the closure of this transformational deal for India and Bharti. We would like to express our deep gratitude and thank the governments of all the 15 countries
for their overwhelming support to this landmark event, the chairman and managing director of Bharti, Mr Sunil Bharti Mittal, said in a statement on Tuesday.
From the $10.7 billion transaction, Zain is expected to earn as much as $3 billion, which will be shared out among its shareholders. Besides being consulted as a shareholder in the business in Tanzania, the government would under normal circumstances also have been entitled to a dividend like the other shareholders.
However, some analysts said that would still have been a raw deal since the governments privilege of right of first refusal (ROFR) before the other shares of Zain Tanzania were sold had been disregarded. Generally, ROFR is the right of a person or company or business partner to purchase something before the offering is made available to others as the Zain Group did to its shares in Zain Tanzania.
How can it be over, when a task force in Kenya, which was formed to look into the deal in that country, hasnt finished its work?, an industry insider in Dar es Salaam said, when informed about the Bharti announcement.
From what has happened, it is clear the Zain-government partnership in Tanzania disfavours us. Can you imagine the government as a shareholder who has even no right to be consulted when the business is sold and who is not accorded the right of first refusal before the shares are sold?
An industry player, who sought anonymity, said the government should have used the ROFR to acquire Zain Tanzania or become a majority shareholder and use the lucrative business to boost Tanzania Telecommunications Company Ltd.
He said it was wrong to deny the government the ROFR privilege.
Tanzania, like several other African governments, formed taskforces to investigate the Zain-Bharti Airtel deal.
Last month, the Tanzanian team presented to Mr Mkulo a report on what the government should take into account before letting the Indian firm take over Zain Tanzania.
Details of the teams proposals have yet to be disclosed, though analysts are saying making the information public would be in the national interest.
The chairman of a mobile phone operator, who also spoke on condition of anonymity, said although the government had not approved the deal, Bhartis announcement meant it could do so soon or had conditionally approved the transaction.
Like Tanzania, others have cried foul play over the sale, with analysts saying Zain may be "flipping" its African assets to the Indian group, without any gains to the countries in which it is operating, and making a huge profit in the process.
According to them, capital gains taxes should be paid, jobs protected and privacy concerns addressed, as it has emerged that all Bharti Airtels operations will be centralised.
In Kenya, the government fears it might lose up to $100 million in taxes.