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Cell phone operators poised for strong growth as more customers shop online
By ThisDay Reporter
23rd March 2010

Tanzania's mobile market appears to have resumed strong levels of growth, following two consecutive quarters of poor growth, a new report has revealed.

This was largely aided by the market-leading three operators Vodacom, Zain and Tigo. The latter in particular noted an impressive increase in its customer base of more than half a million in the third quarter of 2009, which led to overall net additions reaching 1.209 million.

Intense competition has helped to expand the sector, resulting in both Vodacom and Zain also reporting their strongest quarterly net additions in the third quarter of 2009 for the year, according to the report issued by a market research firm, www.companiesandmarkets.com.

“Much of the strength in operators' subscriber figures is due to a reduction in tariffs, not only in response to stiff competition, but also as a result of deteriorating disposable income on account of weak economic conditions,” said the report.

Zain reduced its tariffs by up to 50% on calls made to a favourite phone number on another network in the country and by 17% for all other calls to other networks.

Zantel, a small operator that had been behind the market's muted growth in the first quarter of 2009, revealed that it had 161,000 net additions, following two consecutive quarters of net loss.

The operator, encouraged by the growth in its customer base, launched a new offer that will give a significant portion of its prepaid subscriber free SMS when they top up their phones.

Despite the encouraging efforts of operators to help with subscriber growth, TTCL, the smallest operator, announced a loss of 131,000 in the third quarter; the highest loss for the operator in the year.

Although the impact of TTCL's net loss has been minimal compared to growth reported by the other operators in the market, we have once more revised down its end of year forecast for 2009.

“While we expect that Q409 (fourth quarter of 2009) will follow with another strong increase in the quarter, we do not see mobile customer figures rising much beyond 17.095 million, which is equivalent to a penetration rate of 40.2%,” said the report.

“This is expected to reach 77.6% as of 2014. With price reductions in mobile services impacting already weak ARPU (average revenue per user) levels - Vodacom announced a 28.7% year-on-year fall in blended ARPUs in local currency terms - operators are looking to offer a greater amount of non-voice services despite the absence of 3G licensing.”

Among the more successful non-voice services has been mobile money. Although between 7 to 11% of the population has a bank account, Vodacom's M-PESA service has already seen over 1 million registered users since it launched in April 2008.

“We are expecting to see stronger growth over subsequent years as Vodacom is also joined by others. Local firm Wide International Network has developed a new online payment system that will allow mobile subscribers to shop online,” said the report.

Isaac Kitinya, CEO of the firm, stated that users can make transactions online for services offered by different firms in tourism, travel, sports and entertainment, web maintenance and solution and ticketing, which have been facilitated by a proper integration of the internet and mobile phone technology.
 

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