Executive summary
Price war hurts smaller operators, mergers/acquisitions likely
This annual report provides a comprehensive overview of trends and developments in Tanzania’s telecommunications market. Subjects covered include:
- Key statistics;
- Market and industry overviews;
- Government policies affecting the telecoms industry;
- Market liberalisation and regulatory issues;
- Telecoms operators – privatisation, acquisitions, new licences;
- Major players (fixed, mobile and broadband);
- Infrastructure development;
- Mobile voice and data markets, including 3G;
- Internet development and pricing;
- Broadband, including 3G mobile;
- Convergence (voice/data, fixed/wireless/mobile).
- Average Revenue per User (ARPU).
Tanzania’s economy has been showing solid growth rates of between 5% and 8% every year since 2000 which remained virtually unharmed by the global economic crisis. For the period 2012-2016, the International Monetary Fund predicts GDP growth at between 6% and 8% per annum.
Mining and tourism are main industry sectors. However, the country continues to suffer from underdeveloped infrastructure, including roads, railways, electricity and telecommunications.
The government has actively embraced the principles of competition and a private sector including foreign participation as a means of rapidly advancing economic and social development. Policy reforms have led to the telecom sector becoming one of the more liberal ones in Africa. However, high import tariffs on telecoms equipment and taxes on telephone facilities by various authorities are still placing a burden on investors and operators.
Tanzania has two fixed-line operators (TTCL and Zantel) and eight operational mobile networks, with four additional players licensed under a new converged regulatory regime. With four major operators – Vodacom, Bharti Airtel (formerly Zain), Tigo and Zantel – the mobile market broke the 50% penetration barrier at the end of 2010, but subscriber growth slowed to 20%. The year was characterised by a price war which inflicted heavy subscriber losses on the smaller operators in 2011.
The new converged licensing regime has brought a large number of new players into the market. The liberalisation of voice over internet protocol (VoIP) telephony as well as the introduction of third generation (3G) mobile services and wireless broadband networks is boosting the internet sector which has been hampered by the low level of development of the traditional fixed-line network.
Following the launch of 3G mobile broadband services, the mobile networks are becoming the country’s leading internet service providers on the back of their extensive national infrastructure and existing subscriber bases in the voice market. The additional revenue from data services is badly needed in an almost entirely prepaid environment with rapidly falling voice ARPU. Another new income source is mobile money transfer and m-banking.
The landing of the first fibre optic international submarine cables in the country in 2009 and 2010 has revolutionised the market which up to that point completely depended on expensive satellite connections. In parallel, the government has switched on the first phase of a national fibre backbone network to connect population centres around the country. However, the cost of international internet bandwidth has so far not come down by as much and not as quickly as expected.
Market highlights:
- Price war is hurting smaller operators;
- Very low average revenue per user (ARPU);
- Consolidation likely among the 12 licensed mobile operators;
- Profiles of major players in all market sectors;
- Forecast for mobile market to 2013 and 2016.
Estimated market penetration rates in Tanzania’s telecoms sector – end 2012
Market
| Penetration rate
|
|---|
Mobile
| 62%
|
Fixed
| 0.4%
|
Internet
| 13%
|
(Source: BuddeComm based on various sources)
Companies covered in this report:
- Tanzania Telecommunications Company (TTCL);
- Zanzibar Telecommunications Corporation (Zantel);
- Vodacom Tanzania;
- Bharti Airtel (Zain);
- Millicom (Tigo)
- Benson Informatics Limited (BOL);
- Sasatel (Dovetel);
- Africa Online;
- Raha.com;
- Tele2;
- Alink;
- SatCom Networks;
- SimbaNet;
- Afsat,
- Cats-Net.
