Tanzania Agrees to Deal to Buy Back Airtel's Stake in State Telecom

Tanzania's government has agreed a deal to buy back a 35 percent stake in a state-run telecoms company from the local subsidiary of India's top mobile carrier Bharti Airtel for 14.6 billion shillings ($7.07 million), a senior official said.The east African nation says it wants to regain 100 percent ownership of the Tanzania Telecommunications Corp (TTCL) to recapitalise the cash-strapped firm, which provides mobile voice, data and fixed-line services.

"Legal procedures are now being finalised for the government to buy back Airtel's shares in TTCL and regain sole ownership of the company," January Makamba, deputy minister for communication, science and technology, told parliament late on Tuesday.

"The Tanzanian government has decided to regain 100 percent ownership of TTCL in order to rescue the company."

The Tanzanian government has been in talks with Bharti Airtel over the deal for the past five years but failed to reach agreement on the price until the recent breakthrough.

The Tanzanian government also owns a 40 percent stake in Bharti Airtel's Tanzanian subsidiary.

Communications is one of the fastest-growing sectors in east Africa's second-biggest economy, with seven players in the mobile telecoms industry fighting for market share, forcing tariffs lower.

Bharti Airtel Tanzania Ltd is the second-largest mobile phone operator in the country after Vodacom Tanzania, part of South Africa's Vodacom Group.

Other firms operating in Tanzania include Tigo Tanzania, part of Sweden's telecom group Millicom International Cellular and Zantel, majority-owned by Dubai -based Emirates Telecommunications Corp (Etisalat).

The number of mobile phone subscribers in Tanzania rose by 16 percent in 2014, to 31.86 million, from a year before.

As in other African countries, mobile phone use has sky-rocketed in Tanzania in the past decade. Analysts expect further growth in the east African nation of more than 45 million people. It now has a mobile phone penetration rate of 67 percent.

© Thomson Reuters 2015