The Government of Tanzania is amending the Electronic and Postal Communications Act (EPOCA), 2010 with the aim of allowing foreign investors to take part in Initial Public Offerings (IPO’s) for telecommunication companies.
The Act, which was amended in the Finance Act of 2016, requires telecommunication companies to offload 25 percent of their shares to Tanzania’s only through IPO’s and subsequently list its shares on the Dar es Salaam Stock Exchange.
Whilst presenting the Finance Bill, 2017 in the Parliament, the Minister of Finance and Planning, Dr. Phillip Mpango proposed that the EPOCA be immediately amended to accommodate Tanzanians, companies owned by them and those owned in joint ventures by Tanzanian and foreign investors to take part in the pending IPO’s. On the same vein the Minister of Finance propose to exempt small companies (those that own Application Service Licences only) from the rule of offloading their shares to the public through IPO’s and that EPOCA should only apply to large companies that have Network Facility or Network Service LIcences, initially for application service licences, the minimum listing requirement was 51 percent of its shares.
The amendment proposal also seeks to empower the Capital Markets and Securities Authority (CMSA) to advise the Finance and Planning Minister on how to help a company that will fail to raise money in an IPO on how the goal can be achieved.
The government enacted the Electronic and Postal Communications Act of 2010 to enforce the listing of the telecoms on the bourse to enable broader economic empowerment to local Tanzania’s through ownership of shares, to facilitate growth and deepening of the local capital market, boost the value of the bourse, improve corporate governance and transparency.
The clause to list shares on the Dar es Salaam Stock Exchange was originally included in Section 26 of the Electronic and Postal Communication Act of 2010, the telecommunications companies were initially given a three years window within which to comply and the deadline was later extended to 2015 in order to implement legal and regulatory procedure of the legislation, although since the enactment the law went unheeded over the past six years, its implementation and enforcement came after enactment of the Finance Act of 2016.
To date, it is only Vodacom Tanzania Public Limited the biggest mobile phone service provider that has completed the IPO process though it has remained tightlipped on the outcome largely contributed by the liquidity shortfalls in the market. Tigo Tanzania the second biggest mobile phone service provider is still crippled with the listing essentially due to its ownership quagmire, which has halted to proceed with the process although they primarily submitted its prospectus to the Capital Markets and Securities Authority (CMSA) early this year. The rest of the telecommunication companies including Airtel, Tanzania Telecommunications Company Limited (TTCL), Halotel Tanzania and Zantel additionally are yet to list their shares on the bourse