Tanzania Telecommunications Company Limited - Partial Privatization of TTCL

Partial Privatization of TTCL

The partial privatization of TTCL on February 23, 2001 was one of the first steps towards full liberalization of the market. In the aftermath, Celtel International (previously known as MSI Cellular) which was having its headquarters in Amsterdam, Netherlands, together with the German firm Detecon, obtained 35% shares from the Government of Tanzania. In this context, the consortium took over Board and Management control of TTCL on February 23, 2001] Based on this criterion the consortium had a veto over major Board of directors decisions, it had the right to appoint the senior management, to set the annual business plan and to control all capital expenditure decisions.

Initially the consortium invested US$60 million and a second payment was dependenting on the financial performance of TTCL for the year 2000. In this first partial privatization, other shareholders were local financial institutions 14%; international financial institutions, 10%; and TTCL employees, 5%. The government kept 36% of the shares until TTCL goes onto the Stock Exchange and an initial public offering (IPO) is carried out. On August 5, 2005 the Government of Tanzania and Celtel International signed an agreement whereby the shareholders agreed to the restructuring of the two companies and thereafter the TTCL and the Celtel became legally, financially and operationally totally separate companies.

In February 2007 the Government of Tanzania awarded the Canadian firm SaskTel a three year contract to manage TTCL. The contract is a performance based contract requiring the new management team to improve the financial position of TTCL and grow its customer and revenue sources. SaskTel International started to manage TTCL effectively on July 1, 2007. In this contract, SaskTel was responsible for managing all aspects of the TTCL operations, maintenance and expansion of the company in order to improve its financial, commercial and technical performance. Sasktel was in partnership with TTCL even before the contract. In June 2003 Sasktel International was awarded a contract by TTCL to rehabilitate existing external line plant networks.

Because Sasktel was unable to purchase the 35% stake in TTCL when the operator was partially privatised in 2000, the TTCL workers and The Telecommunications Workers Union of Tanzania (Tewuta) were against the contract claiming that Sasktel will only add an unnecessary burden to both the government and the Tanzanian people. Sasktel had submitted a 45-day notice that ends July 12, 2009, notifying its intention to pull out of the contract.