Bharti Airtel will sell some of its shares in its Tanzanian business to the country’s government to settle an ownership dispute and pave the way for a potential merger with Telkom Kenya.
The Indian operator group’s chairman Sunil Mittal told Reuters: “We have in principle agreed to move forward with a new arrangement of shareholding of 51:49, where Airtel will now drop from 60% to 51% and the people of Tanzania through the ownership of the government of Tanzania will own 49%.”
In 2017, Tanzania’s President John Magufuli claimed that the state-owned Tanzania Telecommunications Company was the owner of Airtel’s local unit. The Indian group refuted this, noting that its purchase of a 60% holding in Airtel Tanzania had been cleared by all the required authorities.
In November 2018, the ownership row escalated when Bharti Airtel confirmed its intention to go ahead with an IPO of its African business, which consists of 14 units including Airtel Tanzania. The Tanzanian government declared that the offering would be illegal on the grounds that it had not been consulted in its capacity as a part-owner of Airtel Tanzania.
In the face of this objection, Bharti Airtel stated that it had made its IPO plans known to the relevant authorities in Tanzania, and noted that it had no plans to change Airtel Tanzania’s ownership structure.
The dispute appears to have been resolved amicably, with Airtel agreeing not only to hand over more shares in the unit but also to pay dividends to the government. Magufuli welcomed the decision, noting that “for eight to ten years we had not received [dividends]… The percentage of dividends is still under discussion.”
Reaching this settlement appears to have rekindled Airtel’s interest in Telkom Kenya. Last June, the Indian group was discussing a possible merger of its Kenyan unit with the rival operator, but negotiations eventually collapsed after the companies failed to find common ground on their investment plans.
However, a deal now appears to be back on the table, according to unnamed sources quoted by Reuters, with Helios Investment is looking to shift some or all of the 60% stake it owns in Telkom Kenya.