To ensure local participation in the telecommunication sector, the Tanzanian government introduced changes vide Section 26 of the Electronic and Postal Communication Act, Chapter 306, Revised Edition of 2022 of the laws of Tanzania (the “EPC Act”), by requiring that all holders of Network Facilities Licence or Network Service Licence list 25% of their issued and duly paid up shares to the public through the Dar es Salaam Stock Exchange (the “DSE”) in line with the Capital Markets and Securities Act, Chapter 79 of 1994 (as amended) (the “CMSA Act”). By listing on the DSE, telecommunication companies will not only fulfil this requirement but also contribute to the development of the local financial market and economy. This action aims to establish a more equitable and participatory economic environment, ensuring that the benefits of the telecommunications sector are more widely shared among the population.
The requirements under Section 26 of the EPC Act do not apply to: - (1) Application Services Licence, (2) Content Services Licence, (3) Postal and Courier Services Licence, (4) Network Facilities or Network Services Licence wholly owned by the Government, (5) Network Facilities or Network Services Licence in which the Government owns at least twenty-five (25%) percent of the licensee’s shares and (6) Network Facilities Licence for lease of towers.
The CMSA Act together with the Dar es Salaam Stock Exchange Rules (PLC) of 2022 (the “DSE Rules”) outlines the listing criteria that applicants must fulfil to have their shares listed at the DSE.
For example, the listing requirements for an applicant at the Main Investment Market Segment are as follows, among others: -
Challenges associated with telecommunication companies not being able to list at the DSE.
Currently, twenty-three (23) companies have secured a Network Facilities Licence, and only one (1) of these has been listed on the DSE, that is, Vodacom Tanzania PLC. Furthermore, twelve (12) telecommunication companies have secured a Network Service Licence and just one (1) has been listed on the DSE, that is, Vodacom Tanzania PLC.
We note that most telecommunication companies required to list twenty-five percent (25%) of their issued and paid-up share capital on the DSE, failed to do so due to non-compliance with the listing requirements under the CMSA Act. As a result, the CMSA has rejected any application from these companies seeking to list on the DSE. As of the date of this article, no punitive actions have been taken by the Tanzania Communication Regulatory Authority (“TCRA”) against companies qualifying to list the shares at the DSE as required by the EPC Act. It should be noted that, non-compliance could lead to the suspension or cancellation of the licence by the TCRA for a material breach of section 26 of the EPC Act, if the breach is not remedied within thirty (30) days of receiving notification from the TCRA.
By Magreth Benson - Legal Intern
Note: This is not a legal opinion, and the contents hereof are not meant to be relied upon by any recipient unless our written consent is sought and explicitly obtained in writing.
