President Magufuli said on Wednesday he had received a report that the state-run Tanzania Telecommunications Company Limited (TTCL) owned the local subsidiary of Bharti Airtel outright but had been cheated out of shares.
Magufuli subsequently ordered the Minister of Finance and Planning, Dr Philip Mpango, to investigate Airtel Tanzania's ownership documents. The Tanzanian government currently owns a 40 per cent stake in Airtel Tanzania, with the remaining 60 per cent owned by Bharti Airtel.
Bharti Airtel said it had not received any notice or communication from the government, but would work closely with the government to resolve doubts to the satisfaction of all shareholders.
“Our acquisition of the said 60 percent shareholding in June 2010 was in full compliance with and following all approvals from the government of Tanzania,” the company said in a statement.
"We intend to work closely with the government of Tanzania and will take all steps necessary to resolve any doubts or concerns to the satisfaction of all of the stakeholders, including our shareholders."
Airtel said the mentioned transaction of 2005 between Celtel and TTCL was well before the acquisition of its 60 percent shareholding in Celtel Tanzania Limited from Zain to a Bharti Airtel group entity in June 2010.
"In addition, we would like to highlight that our acquisition of the said 60 per cent shareholding in June 2010 was in full compliance with and following all approvals from the government of Tanzania."
TTCL's board of directors and management insisted on Thursday that the government's shares in Airtel Tanzania were illegally transferred and vowed to carry out instructions by President Magufuli for TTCL to gain full ownership of the third-biggest mobile operator in the country.
"Bharti Airtel as a major foreign investor in Tanzania remains committed to Tanzania and will take all steps to protect its businesses, employees, partners, and investments in Airtel Tanzania."
Magufuli’s state ownership claim on Bharti Airtel’s local business will likely further unnerve foreign investors in the country after his government launched a crackdown on mining firms in the country this year.
Last year, Magufuli ordered telecoms companies to list at least a quarter of their units on the local stock exchange to increase domestic ownership.
Like other African countries, mobile phone use has surged in Tanzania over the past decade on the back of cheaper smartphones, recording a 0.9 per cent annual increase in the number of mobile phone subscribers in 2016 to 40.17 million.
Mobile phone operators in Tanzania include Vodacom Tanzania , part of South Africa’s Vodacom, Tigo Tanzania, which is part of Sweden’s Millicom, Bharti Airtel Tanzania, and Halotel, owned by Vietnam-based telecoms operator Viettel.