Tanzania takes back control of TTCL

While the majority of incumbent mobile operators in Africa are being privatized to save them from collapsing, the Tanzanian government is finalizing the acquisition of all of Tanzania Telecommunications Co. (TTCL) after Zain Tanzania pulled out of the partnership.

The government of Tanzania went into partnership with Zain in 2001 by selling 35 percent of TTCL shares in order to save the company from closing. The Tanzanian government had failed to recapitalize the company and expand its operations to compete with private operators.

Zain owned 35 percent of TTCL while the rest of the shares were held by the government of Tanzania.

Like in many other countries in Africa, the partial privatization of TTCL was one of the first steps toward the liberalization of the telecom sector, with the aim of attracting international telecom investment. Currently Tanzania is the only country in the east African region that has nine mobile operators competing for customers, after five more operators were licensed this year.

The buyback of TTCL from Zain is considered strange by many African telecom analysts because many countries in Africa including Zambia, Ghana, Nigeria and Zimbabwe are selling their incumbent operators to foreign operators.

"It is unprecedented in Africa for a country to buy back a company and take full control of the company again because of the high cost of operations and competition in the mobile market," Amos Makanya, senior analyst at African Mobile Communications Development, told Computerworld Zambia .

In August 2005, the government of Tanzania and Zain signed an agreement to restructure the two companies in order to make TTCL and Zain become legally, financially and operationally separate companies. Zain withdrew from the partnership because of conflict of interests, as the two companies were making aggressive network expansions and growing their subscriber bases.

Problems started when the government of Tanzania awarded a Canadian firm, SaskTel, a three-year, performance-based contract to manage TTCL to improve TTCL's financial position, growing its customers, revenue and maintenance base. The contract came to an end last year. The government of Tanzania had previously been unable to sustain the operations of TTCL on its own.

The Tanzanian government is buying back the 35 percent stake from Zain to once again make TTCL a fully government-owned firm, hoping the company will now be able to compete with private operators in service provision, according to Tanzanian Minister of Communication, Science and Technology Peter Msolla.

Zain agreed to sell the shares back to the government of Tanzania in a bid to recover its investment in the company as the two companies were now competing for customers.

The government has also announced it will pay off a US$6.8 million debt owed by TTCL. As a result of the reinvestment, Msolla said the government of Tanzania expects the operator will be able to secure loans from both local and foreign lenders as early as July this year to enhance its operations and its expansion program. The company seeks to apply for $180 million in loans under government guarantee to stabilize the firm.

TTCL provides voice and data communication services to more than 300,000 business and residential customers in Tanzania, as well as network services to other licensed telecom operators in the country. TTCL is connected to the Seacom undersea cable network.