Tanzanian government investigation reveal irregularities in the acquisition of Airtel Tanzania

A recent probe into Airtel Tanzania has revealed unlawful transfer of the local unit of the Indian mobile-phone company Bharti Airtel Ltd. originally from the East African country.

The investigation that revealed illegal procedures were involved in the privatization of Tanzania Telecommunications Corporation Ltd.(TTCL), has spurred the Tanzanian government to take action towards regaining its rightful share of the business.

Similar to the Airtel experience is that of Acacia Mining Ltd. –63.9 percent owned by Barrick Gold Corp– who was accused in 2017 by the Tanzanian government of evading taxes for years by under-declaring exports and has banned exports of gold and copper concentrates.

As a show of good faith, Barrick Gold Corp – settled with the Tanzanian government to establish a new structure of allocating equal economic benefits between the company and the Tanzanian government, adding the payment of $300 million to the state.

Bharti Airtel struck a deal to purchase mobile operations in 15 African countries from Zain in 2010 and inherited their stakes with that of TTCL included.

However, in 2016 Bharti Airtel who was the owner of 35 percent stake in the state telecom company agreed to sell its shares back to the government for 14bn/-. Sale was concluded in the same year and the company returned to being entirely owned by the Eastern state.

Speaking on the recent investigation in a statement from President John Magufuli’s office, the country’s Finance Minister Philip Mpango said “What we saw was very dirty and terrible. In short, our country was conned and a lot of money was lost”.

In response to the allegation, Airtel asserted that the 60 percent stake of 2010 acquisition in the company from Kuwait’s Mobile Telecommunications Co., known as Zain, was fully compliant to procedures and followed all authorizations from the government.

The dispute between the company and the Tanzanian government is a reoccurring  conflict over the years as the Tanzanian company keeps demanding more money in compensation.