Tanzania telecoms finally wiggle out of law on listing on DSE

The Tanzanian government has been forced to amend a law that required telecommunications companies to list on the Dar es Salaam Stock Exchange, following strong opposition from the companies.

For nearly two years, the government has been locked in a tug-of-war with mobile phone firms over adherence to the Electronic and Postal Communications Act (Epoca), which requires them to float at least 20 per cent of their shares on the DSE for citizens to buy.

The companies have protested the requirement, saying that the stockmarket performance could impact negatively on the share prices.

After the enactment of Epoca in 2010, a regulation to enforce the law was prepared in 2011, but the telcos’ refusal to comply necessitated rounds of consultation with the government.

Clause 79 of Epoca says: “Existing licensee of Network Facilities, Network Services, Application Services or Content Services shall... within three years from the commencement of this Act, and in accordance with requirements of the Capital Market and Securities Act, be required to offer shares to the public and subsequently list on the stock exchange.”

Ian Ferrao, managing director of Vodacom Tanzania which boasts 12.4 million subscribers said that mobile phone operators argued that before enforcing the law, the government was supposed to take into account the pros and cons of mandatory listing based on the experiences of countries that had followed that path.

The EastAfrican has been informed that after the principle regulation was issued, four mobile companies — Vodacom Tanzania (Vodacom), Bharti Airtel (Airtel), MIC Tanzania (Tigo) and Etisalat (Zantel) — formed a consortium and hired Barclays Africa as a consultant to study the market and weigh the pros and cons of listing on the Dar es Salaam bourse.

Viettel which trades as Halotel and Smart were not yet in operation at the time.

The consultations resulted in the amendment of the principle regulation of 2011, deleting the requirement for mandatory listing.

The new regulation relaxes the requirement that is in principle, aimed at empowering the locals and forging ways to make telecoms in the country more accountable and transparent.

An official privy to the consultations told The EastAfrican: “After learning from other countries, we found that when the locals buy shares it does not necessarily translate into ownership of the companies because most of them would wait for the shares to appreciate and sell them to major companies.”  

In view of this, it was proposed that companies that do not comply with the listing requirement contribute to a fund that would finance local projects.

Section 18B-(1) of the new regulation says: “Notwithstanding the provisions of the regulation 18(1)(a), a holder of an individual licence may, pursuant to the provisions of the Capital Markets and Securities Act, list its shares on a stock exchange within the United Republic but subsection 4 gives freedom to a licencee who does not comply to contribute to a fund an amount equivalent to 0.6 per cent of its gross operating revenue for sector development and promotion of local ICT startups.  

According to Epoca, all licensed telcos were supposed to list in 2013, and that by that time, the regulation was ready but the enforcement of the law had been delayed due to consultations between the government and mobile telephony companies.

DSE executive director Moremi Marwa said that since the passing of the regulations, not a single telco had expressed interest to list on the stockmarket. 

READ: Telcos resist pressure to list on Dar bourse

Pundits, however, say that it is unlikely that the six mobile telephone companies will list because they had been reluctant from day one and had stood in solidarity to fight against that law.