07 Aug 2013

Tanzania: The EPCA comes under scrutiny

Criticism from foreign companies over Tanzania's listing rules is one of the side effects of the EPCA Act. Shamiza Ratansi of Adept Chambers discusses the implications.

Tanzania's listing rules inciting criticism from foreign telecoms companies EastVillage Images

The Electronic and Postal Communication Act, 2010 (the EPCA) came into force on 19 June 2010 amid a lot of public criticism. The EPCA principally repeals the Broadcasting Services Act and the Tanzania Communication Act and aims to put in place a comprehensive regulatory framework for electronic and postal communication which is in line with the current developments in the industry.

Local Shareholding and listing requirements

The EPCA, like its predecessor, requires a company intending to operate any electronic communication systems or offer electronic communication services, to obtain a licence from the Tanzania Communication Regulatory Authority (the Authority). The EPCA was amended in August, 2010 amending the local shareholding and listing requirements.

Before amendment the EPCA stipulated that a minimum of 35 per cent of the applicant’s shares were to be held by a local shareholder in the case of a electronic communication or postal licence and a minimum of 51 percent of the shares in case of Contents Service licence.  However, after the amendment in August, the Minister was given a mandate to consult with the Authority and promulgate regulations with respect to the local shareholding requirement and the procedure for approval and transfer of shares. Regulations which have been promulgated are silent with respect to local shareholding requirement for electronic communication licence.  As such there are currently no requirements for local shareholding.

Listing rules

One of the main and much highlighted features of the EPCA was the requirement for license holders to offer shares to the public and list with the Dar es Salaam Stock Exchange within three years of the EPCA coming in force. This requirement is subject to the requirements of the Capital Markets and Securities Act.  The modalities with respect to listing would be set out in the regulations to be promulgated by the Minister. It has not been made clear what the requisite percentage of shares that would be required to be listed and whether they would be in addition to the local shareholding requirement or would the listed shares satisfy the local shareholding requirement.

Stakeholders have widely criticised the listing requirement as being unconstitutional as the Tanzanian Constitution gives individuals the right to own private property and dispose of it without any governmental intervention. Some stakeholders have even shared the sentiment that the listing requirements indicated that the country was shifting to the era of expropriation of private property.

After the amendment of the EPCA the listing requirement has been changed slightly to stipulate that the Minister shall within three years from the date of the EPCA coming into force promulgate regulations to prescribe the procedure for selling shares to Tanzanian nationals through listing with the stock exchange.

Local support

Some Members of Parliament commended the EPCA noting that telecommunication companies are making a lot of profit and listing on the stock market would provide Tanzanians with the opportunity to invest in those companies and benefit from their growth. It is also worth noting that most of the telecommunication companies (mostly mobile operators) which  have been criticising the listing requirements are listed with stock exchanges in foreign countries. For example Vodacom is enlisted on the JSE Security Exchange of South Africa, Tigo on US Stock Market and Zain on the Kuwait Stock Exchange.  

Interconnection and passive infrastructure

The EPCA empowers the Authority to regulate interconnection, co-location, infrastructure sharing it also provides the Authority with mandate to approve or reject communication service providers  infrastructure sharing agreements.

Price Regulation

EPCA requires all electronic communication licence holders to file with the Authority the prices they intend to charge for their services two (2) weeks prior to their introduction. The Authority is entitled to undertake review of the prices to ensure that they are transparent, do not unreasonably prejudice the competitive opportunities of other licensees as well as take account of the regulations and recommendations of any international organisation of which the United Republic is a member.

Fair Competition

The EPCA provides for fair competition among licencees and prohibits anti-competitive conduct including but not limited to rate fixing, market sharing, boycott of a supplier of apparatus or boycott of another competitor. The Authority is empowered to fine a licensee who breaches the fair competition requirements a fine of not less than Tanzania Shillings five hundred thousand (T.Shs. 500,000/=) and/or to imprisonment for a term of not less than five (5) years.

Sim and Equipment Registration

EPCA introduces the requirement to register all detachable SIM cards of built in SIM card mobile telephones.  The aim behind the registration is to:

i)    to protect consumers from misuse of communication services;
ii)    to enable consumers to be identified as they use value added services such as mobile banking, mobile money transfer, electronic payments for services such as water, electricity, pay-TV etc;
iii)    to enhance national security; and
iv)    to enable network operators to promote “know your customer” (KYC).

Shamiza Ratansi is a partner at  Adept Chambers in Tanzania which is a member of the African Legal NetworkHer practice focuses on banking,  M&A, competition, telecoms and mining. Contact: shamiza.ratansi@adeptchambers.com