Finance and Planning Minister Dr Philip Mpango submitted to President John Magufuli on Thursday the report of an investigation by his ministry into the ownership of Airtel Tanzania.
In its probe findings, the report concluded that there were gross violations of the country's laws and regulations that led the state-run Tanzania Telecommunications Company Limited (TTCL) to be denied 100 per cent ownership of Airtel Tanzania.
The government currently owns a 40 per cent stake in the mobile phone operator, with the majority 60 per cent of the shares held by Bharti Airtel.
"We have noted with concern the statement made by the ... Finance Minister," Bharti Airtel said in a statement.
Bharti Airtel restated the following sequence of events, which it claimed "clearly demonstrate all of the transactions were completed with full transparency, integrity and fairness:"
In or around 2001, the government of Tanzania initially launched two open tenders, one after the other, to seek investors to privatize TTCL. MSI Systems International Cellular Investments B.V. (MSI) was the successful bidder in the second round and eventually acquired a 35% stake in TTCL for a total consideration of $65m.
As a result, TTCL was owned 65% by the government of Tanzania and 35% by MSI. Celtel Tanzania was subsequently established as a 100% owned subsidiary to launch the mobile operations using shareholder loans from TTCL which were later converted into equity.
The government of Tanzania and MSI in 2005 agreed to split the two companies and each (government of Tanzania and MSI) directly came to own 65% and 35% of TTCL and 65% and 35% of Celtel Tanzania. As each was already a shareholder, there was no valuation or consideration required. At the same time, MSI acquired an additional 25% stake in Celtel Tanzania and paid $28m to the Government of Tanzania.
As of April 2005, MTC of Kuwait became the ultimate 60% shareholder of Celtel Tanzania (they rebranded the company 2 years later as Zain). Airtel acquired that stake in 2010. In 2015 the government of Tanzania became 100% owner of TTCL by purchasing the remaining 35%.
"In each instance, the transactions were initiated by the government of Tanzania and conducted with full transparency and all the required approvals and submissions were completed in full compliance," it said.
The transactions were also conducted under the oversight of the board and shareholders of MSI, represented by members of the World Bank (IFC), the British government (CDC), the American government (OPIC), the Dutch government (FMO), and the German government, Bharti Airtel explained.
"It is important to note significant importance was placed by this group to ensure all conduct was consistent with the highest standards of ethics, governance and corporate conduct," it said.
"Taking note of certain remarks that have been made by the ... Finance Minister on the privatisation process, we are requesting the ... Finance Minister to share with us the specific findings or concerns so we can respond with facts from the records of the company. We will seek support and collaboration from the previous shareholders/directors and officers of MSI to engage with the authorities to provide any necessary facts and a satisfactory explanation."
Bharti Airtel said it intends to work closely with the Tanzanian government and take all steps necessary to resolve any concerns.
"Bharti Airtel as a major foreign investor in Tanzania remains committed to the Tanzanian market and will take all steps to protect its businesses, employees, partners and investments in Airtel Tanzania," it said.