Tanzania Telecommunications Corporation

Tanzania Telecommunications Corporation, commonly known as TTCL, is a Tanzanian state-owned telecommunications operator whose principal historic role has been the provision of fixed-line communications. The company emerged in 1993 when the former Tanzania Posts and Telecommunications Corporation was divided during a restructuring and liberalisation of Tanzania’s parastatal and communications sectors. The separation created three institutions: Tanzania Posts Corporation, Tanzania Telecommunications Company Limited, and the Tanzania Communication Commission. TTCL subsequently became the operating company responsible for telecommunications services, while regulatory functions were assigned to the commission. The corporation’s institutional roots are older than its 1993 formation. Telecommunications, postal and telegraph services in the territory were originally organised through regional East African institutions. The East African Post and Telegraph Company operated across Tanganyika, Kenya and Uganda from 1933, and was replaced by the East African Posts and Telecommunications Administration in 1951. Following the creation of the East African Community in 1967, the East African Post and Telecommunications Corporation took over regional responsibilities. The collapse of the community in 1977 led Tanzania and its former partners to establish national postal and telecommunications organisations. Tanzania created the Tanzania Posts and Telecommunications Corporation in 1978, which was later divided to form TTCL. Under the Tanzania Telecommunications Act of 1993, TTCL became the licensee for basic fixed telephone services in Tanzania mainland and Zanzibar. It owns and operates the public switched telephone network in both areas. Before the arrival of mobile operators in the mid-1990s, TTCL held a mainland monopoly and operated in a Zanzibar market where Zanzibar Telecoms Limited was also licensed for fixed basic telephony. The liberalisation of the sector and the rapid expansion of mobile communications changed the competitive environment. TTCL expanded beyond its traditional fixed-line base into mobile and internet services, but its historic fixed-network position remained the defining feature of the business. The company experienced financial and operational difficulties and went through several restructuring and management arrangements. In 2001, the Tanzanian government partially privatised TTCL by selling a 35 percent interest to a consortium involving Celtel International and Detecon. The consortium obtained substantial governance and management powers, including influence over senior appointments, business planning and capital expenditure. In 2005, TTCL and Celtel were separated legally, financially and operationally, ending the joint-management arrangement. The minority interest later passed through Celtel’s ownership changes to Zain and then to Bharti Airtel. In 2007, SaskTel International received a three-year executive management contract intended to improve TTCL’s technology, finances, operations, organisational culture, customer base and revenue sources. The arrangement ended prematurely after disagreement over the company’s long-term capital-funding plan. SaskTel gave notice of termination in July 2009, and its management team departed in September of that year. Bharti Airtel agreed in 2016 to sell its 35 percent stake back to the Tanzanian government. The transaction was completed on 23 June 2016, restoring full state ownership. TTCL therefore returned to being an entirely government-owned national operator. The company continues to provide fixed-line, mobile, broadband and other telecommunications services in Tanzania, while maintaining a particularly strong position in the fixed-line segment. Its infrastructure history includes work with Huawei as an infrastructure vendor and Ericsson as a long-term strategic supplier.

TTCL’s history is connected to the development of public telecommunications in East Africa. In 1933, the East African Post and Telegraph Company provided postal, telegraph and telephone services across Tanganyika, Kenya and Uganda. The organisation was replaced in 1951 by the East African Posts and Telecommunications Administration. After the formation of the East African Community in 1967, the East African Post and Telecommunications Corporation assumed responsibility for common regional services. The dissolution of the East African Community in 1977 required the former member states to establish national postal and telecommunications bodies. Tanzania created the Tanzania Posts and Telecommunications Corporation in 1978. In the early 1990s, the Tanzanian government restructured its parastatal sector and liberalised telecommunications. The 1993 restructuring divided the former corporation into Tanzania Posts Corporation, Tanzania Telecommunications Company Limited and the Tanzania Communication Commission. TTCL became the national telecommunications operating company, while the commission assumed regulatory responsibilities. The Tanzania Telecommunications Act of 1993 established the legal framework for the company’s fixed-line role. TTCL became the licensed provider of basic fixed telephone services on Tanzania mainland and Zanzibar and operated the public switched telephone network. Before mobile competition appeared in late 1994, the company had a mainland monopoly. Zanzibar had a different competitive structure because Zanzibar Telecoms Limited was also licensed to provide fixed basic telephone services. The arrival of mobile operators and increased domestic competition exposed financial and management weaknesses at TTCL. The government responded with partial privatisation in February 2001, selling 35 percent of the company to a consortium involving Celtel International and Detecon. The investors were given significant influence over governance, senior management, annual planning and capital expenditure. In 2005, the parties restructured the relationship and separated TTCL from Celtel as independent legal, financial and operational entities. TTCL later became subject to a management transformation programme. In February 2007, shareholders awarded SaskTel International a three-year executive management contract. SaskTel took operational leadership in July of that year and was expected to strengthen the company’s competitive position, technology platform, customer base and revenue performance. A dispute over a proposed long-term capital-funding plan led SaskTel to issue a termination notice on 12 July 2009. The SaskTel management team formally departed in September 2009. Ownership of the minority stake changed as Celtel’s parent companies changed. Zain acquired the relevant Celtel parent interest, and Bharti Airtel subsequently acquired Zain’s African mobile operations and inherited the TTCL stake. In February 2016, Bharti Airtel agreed to sell its 35 percent holding back to the Tanzanian government. The buyback was completed on 23 June 2016, restoring TTCL to full state ownership. TTCL’s business has historically centred on fixed telephony, but its scope includes mobile communications, internet access and enterprise connectivity. The company operates throughout Tanzania through regional offices and engineering departments. As of March 2016, the company had approximately 305,000 subscribers, with fixed lines representing about 45 percent of that base. It retained an especially strong position in fixed-line services, accounting for more than 99 percent of fixed-line subscribers according to the referenced account. Huawei has served as an infrastructure vendor and Ericsson as a long-term strategic supplier. The corporation remains an important national telecommunications institution, combining legacy fixed-network responsibilities with modern mobile and data services.

1. 2016TTCL returns to full state ownership

   Bharti Airtel sells its 35 percent interest to the Tanzanian government, with completion recorded on 23 June.

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2. 2009SaskTel management contract ends

   SaskTel’s management team leaves after a disagreement over the company’s long-term capital-funding plan.

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3. 2007SaskTel International begins management contract

   SaskTel International assumes executive leadership under a transformation contract intended to improve TTCL’s competitiveness and financial performance.

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4. 2005TTCL and Celtel become separate companies

   A restructuring ends joint management and establishes TTCL and Celtel as legally, financially and operationally separate entities.

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5. 2001Partial privatisation

   The government sells 35 percent of TTCL to a Celtel International and Detecon consortium, which receives extensive management and governance rights.

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6. 1994Mobile competition reaches Tanzania

   The entry of mobile operators ends TTCL’s previous mainland fixed-telephony monopoly and changes the structure of the national telecommunications market.

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7. 1993TTCL is formed

   The Tanzania Posts and Telecommunications Corporation is split into Tanzania Posts Corporation, Tanzania Telecommunications Company Limited and the Tanzania Communication Commission.

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8. 1978Tanzania creates a national postal and telecommunications parastatal

   Following the breakup of the East African Community, Tanzania establishes the Tanzania Posts and Telecommunications Corporation.

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9. 1967East African regional corporation is established

   The East African Post and Telecommunications Corporation succeeds the earlier administration after the creation of the East African Community.

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10. 1951Regional administration is reorganised

    The East African Posts and Telecommunications Administration replaces the earlier East African Post and Telegraph Company.

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11. 1933East African telecommunications administration begins

    The East African Post and Telegraph Company provides postal, telegraph and telephone services across Tanganyika, Kenya and Uganda, establishing part of TTCL’s institutional lineage.

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State-owned national telecommunications operator with a historically dominant fixed-line network and additional mobile, broadband and enterprise connectivity services.

• Fixed-line telephone servicesFixed telecommunications1993

  TTCL’s historic core offering is fixed basic telephony delivered over Tanzania’s public switched telephone network. The corporation is licensed to provide fixed services on mainland Tanzania and Zanzibar and has operated the national fixed-line infrastructure. Its fixed network remains the company’s most distinctive market position, despite the growth of mobile communications.

• Mobile communicationsMobile telecommunications

  TTCL expanded its portfolio beyond legacy fixed lines to participate in Tanzania’s mobile communications market after the sector was opened to competition. Mobile services broadened the corporation’s customer proposition and placed it in direct competition with other national mobile network operators.

• Internet and broadband servicesData connectivity

  Internet connectivity is part of TTCL’s modern telecommunications portfolio. The offering is associated with the company’s fixed and mobile network capabilities and supports consumer, institutional and business data requirements.

• Enterprise telecommunicationsBusiness connectivity

  TTCL provides telecommunications infrastructure and connectivity for organisations through its national network, regional offices and engineering operations. The enterprise scope complements consumer fixed-line, mobile and internet services.

• 2016Buy back Bharti Airtel’s minority stakeM&A

  Bharti Airtel held a 35 percent interest inherited through earlier ownership changes involving Celtel and Zain.

  What changed. The Tanzanian government agreed to repurchase the shares for TSh 14 billion and completed the transaction on 23 June 2016.

  Aftermath. TTCL returned to complete state ownership.

  Share repurchase price. TSh 14 billion (2016)

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• 2007Appoint SaskTel International to lead a transformationStrategy

  TTCL faced financial and operating problems that threatened its long-term viability.

  What changed. Shareholders awarded SaskTel International a three-year executive management contract covering technology, finance, operations, culture, customers and revenue growth.

  Aftermath. SaskTel assumed leadership in July 2007, but its engagement ended early after a dispute over long-term capital funding.

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• 2005Separate TTCL and Celtel operationallyStrategy

  The shareholders agreed to revise the post-privatisation operating relationship.

  What changed. TTCL and Celtel were made legally, financially and operationally separate companies.

  Aftermath. Celtel’s shareholder retained an interest in TTCL but no longer jointly operated the two businesses.

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• 2001Partially privatise TTCLM&A

  Increasing competition and management and financial difficulties led the government to seek private participation.

  What changed. The government sold 35 percent of TTCL to a consortium involving Celtel International and Detecon and transferred extensive management and governance powers to the investors.

  Aftermath. The consortium controlled major aspects of senior management, business planning and capital expenditure until the relationship was restructured.

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• 1993Separate the national telecommunications operator from the postal corporationStrategy

  The Tanzanian government restructured state-owned parastatals while liberalising the telecommunications sector.

  What changed. It divided the Tanzania Posts and Telecommunications Corporation and created TTCL as a dedicated telecommunications operating company.

  Aftermath. TTCL became the licensed operator of fixed basic telephone services in mainland Tanzania and Zanzibar, while the Tanzania Communication Commission assumed regulatory responsibilities.

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• 2016Bharti Airtel agrees to sell its TTCL stake to Tanzania

  Bharti Airtel agreed to return its 35 percent holding to the Tanzanian government, with the transaction completed on 23 June 2016.

  M&A
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• 2009SaskTel gives notice to end its TTCL management contract

  SaskTel submitted a 45-day termination notice after disagreement with the majority shareholder over a long-term capital-funding plan. Its management team left in September.

  Leadership change
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• 2007SaskTel International takes over executive management of TTCL

  SaskTel International assumed leadership under a three-year contract designed to transform TTCL’s technology, finances, operations and organisational culture.

  Leadership change
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• 2005TTCL and Celtel end joint management arrangement

  The shareholders agreed to restructure the relationship so that TTCL and Celtel became legally, financially and operationally separate companies.

  Other
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• 2001TTCL is partially privatised through the sale of a 35 percent stake

  Celtel International and Detecon acquired a 35 percent interest in TTCL from the Tanzanian government and received significant board and management powers.

  M&A
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1. Tanzania Telecommunications Corporation