Millicom officials here to expedite Tigo, Zantel sale
What you need to know:
- TCRA and CMSA say they are unaware of the transfer, but Millicom Tanzania board chairman says officials from the parent firm are in Tanzania to attend to regulatory matters
Dar es Salaam. Representatives from Millicom International Cellular S.A. are currently in Tanzania in an effort to expedite its sale of Tigo Tanzania and Zantel to Axian Group of Madagascar.
Last week, Millicom International Cellular S.A. (Millicom) – which is listed on Nasdaq (New York City) and Stockholm (Sweden) stock markets – announced that it was selling its Tanzanian subsidiaries (Tigo and Zantel) to a consortium led by Axian Group of Madagascar.
“From what I know, senior Millicom officials are in town working on compliance issues. The speed at which they can complete the assignment depends on the pace of service delivery that they get from Tanzanian authorities,” said the board chairman of Millicom in Tanzania, Ambassador Ami Mpungwe.
He exuded confidence that since the sale was triggered by Millicom’s desire to exit Africa, he hoped that the company’s executives who were currently in Tanzania would work at a pace that was in line with the parent company’s aspirations.
“Basically, you have to find a buyer before a date with the authorities for approvals,” he said.
Yesterday, a number of regulatory bodies told The Citizen that they had not heard from Millicom despite reading media reports of its decision to sell Tigo and Zantel.
Tanzania Communications Regulatory Authority (TCRA) director general Jabiri Bakari said that procedures required Tigo to furnish them with the information about their intention, but so far they have only heard of the sale through the media.
“They have neither furnished us with preliminary information nor any official statement, but I am sure they will do so when they are ready because that is what is required of them after completing their affairs,” Dr Bakari said.
Capital Markets and Securities Authority (CMSA) public relations manager Charles Shirima said the y were to receive formal communication regarding the company’s sale of its shares.
“Until yesterday there was no official letter regarding the sale of the company, but we will be making a follow-up,” said Mr Shirima.
Though efforts to talk to the Fair Competition Commission (FCC) could not materialise yesterday, a browse through the Commission’s website revealed that the sale was not one of those that had been posted for scrutiny as required under the Fair Competition Act, No.8 of 2003.
The director of National Payment System at the Bank of Tanzania (BoT), Mr Bernard Dadi, said normally when a telecommunication company was transferring ownership it was being obliged to taking the matter to the matter to the TCRA and to the Business Registration and Licensing Agency (Brela) for registration of the new owner.
They also have to take the matter to the Tanzania Revenue Authority (TRA) for tax payment and other related issues.
“We come in at the end of the deal for due diligence to know whether or not the company is in a position to do business with public funds,” Mr Dadi said.
Thus, in line with the law, the sale will have to receive the approval of FCC, the CMSA and TCRA, Brela and BoT, among others.
TRA comes in so as to collect tax Capital Gain Tax as outlined under the Income Tax Act, 2004 when company sale happens.
Section 90 of The Income Tax Act requires a person who derives a gain from the realisation of an interest in land or buildings or shares or securities held in a resident entity situated in the United Republic, to pay Capital Gains Tax.
The applicable rates are 10 per cent of gain for a resident person and 20 per cent for a non resident.
Similarly, Section 56 (1) of the Income Tax Act, 2004 reads: “Where the underlying ownership of an entity changes by more than fifty per cent as compared with that ownership at any time during the previous two years, the entity shall be treated as realizing any assets owned and any liabilities owed by it immediately before the change.”
“Going by Section 56 (5) of the Finance Act 2014, the entity shall have the duty to report to the commissioner immediately before and after the changes referred to under subsection (1) had occurred.”
