The Tanzania Telecommunications Company (TTCL), which was until 2001 a state-controlled entity, was formed out of the former Tanzania Posts and Telecommunications Corporation in 1994.
When a 35 per cent share was sold to a consortium of Mobile Services International (MSI) and Detecon in 2001 at a price of $120 million, the foreign investor was immediately given management control of the firm.
However, soon thereafter, it emerged that the foreign partner was not comfortable with the company's accounts for the year 2000, and immediately a dispute ensued.
As the consortium had paid the first instalment of $60 million for the 35 per cent purchase of shares, the financial reports had been set as a benchmark against payment of the remaining $60 million.
After disputing the figures, which had been repeatedly audited by two local independent firms, it was agreed by the two investors - the government of Tanzania and MSI/Detecon - that an independent auditor be hired to re-audit the books in dispute, and that whatever the result it would be used as a benchmark to calculate the last payment.
According to the independent auditor, who was picked by the Institute of Chartered Accountants of England and Wales, it emerged that MSI was required to pay a mere $4.96 million for the shares, with an accrued interest assessed at $321,000.
This made $5.281 million (Tsh5.3 billion) the final sum due to Tanzania - far below the $60 million in the earlier bid. As part of the privatisation process, the then Tanzania Communication Commission granted five new licenses to TTCL for basic public fixed line telecommunications services, mobile telecommunications, radio paging, data services and ISP services.
In return, TTCL disengaged from its joint ventures in Mobitel (cellular) and Datel (data services). The basic license gave TTCL an exclusivity period of four years and an obligation to have 800,100 connections by the end of the exclusivity.
But as the exclusivity period ended in February 2005, the projected figure of 800,100 connections had not been reached, though it currently provides voice and data communication services, to over 150,000 business and residential customers in Tanzania.
The company also provides network services to other licensed telecom operators.
These figures are an insignificant expansion over six years for a firm placed under foreign management expertise for the express purpose of turning it around - by February, 1999, the firm had an exchange capacity of 192,365 lines and 126,515 connected direct exchange lines.
After a long battle to overhaul the giant firm, the shareholding structure was realigned, with the TTCL offshoot, Celtel Tanzania Ltd, detached from TTCL.
Under the deal, the government consented to allow Celtel International - the new shareholder after the exit of MSI/Detecon - to acquire majority shares in Celtel Tanzania Ltd in return for Celtel International relinquishing its board and management control in TTCL.