JOHANNESBURG, South Africa-The wireless market in Tanzania is gaining momentum with Vodacom’s pending rollout of a new GSM network. The new entrant is no small force to contend with and is likely to cause a few ripples.
Vodacom South Africa, with 2.7 million subscribers at the end of 1999, is one of the most successful GSM networks in Africa. The shareholding of the company includes a 31.5-percent stake by Vodafone AirTouch, which recently joined forces with Germany’s Mannesmann.
The telecommunications industry will be monitoring carefully the progress of the new Tanzanian network as it will compete not only with the three cellular operators currently offering service, but also with existing wireless local loop systems. Furthermore, the Tanzania Telecommunications Co. Ltd. (TTCL) is about to be privatized and will take on a strategic partner, which in turn could entitle it to roll out an additional cellular network.
Industry sources believe that entering the consumer market will not be easy, as the cellular market overall has been slow in the uptake. Cellular services, at about US$0.30 per minute, are regarded as expensive compared with the US$0.03 per minute offered by the fixed-line operator, TTCL, which is seen very much as the “people’s network.”
The existing cellular network operators nonetheless are fighting hard to penetrate the market, and competition is fierce.
Mobitel, which has been operating a Total Access Communications System (TACS) network since 1994, has about 50,000 subscribers and is expanding to 10 regions, adding base stations and scheduled to switch to GSM technology in the latter part of the year.
Tritel, a GSM 900 network, has gained 35,000 subscribers since its 1996 switch-on date, but suffers from congestion problems in the main centers.
The islands of Zanzibar and Pemba are firmly in the control of Zantel, which has a GSM 900 network and about 5,000 subscribers. The operator is aiming to expand into the mainland in the not-too-distant future.
TTCL holds a cellular license, but it is not currently offering service.
“There is great potential for the cellular industry in Tanzania,” said Dr. Zaipuna O. Yonah, personal assistant to the managing director and manager of the TTCL Internet Project.
“There are about 32 million people in Tanzania, 50 percent of them young, aggressive and open-minded about new technologies,” he said. “From 1994 to mid-1998, at the time when the TTCL network was undergoing major modernization, cellular mobile networks served as an extension of the PSTN and not as an alternative.
“Since mid-1998, however, the PSTN has been performing competitively and cellular services have become an alternative. Therefore, at the end of the day, what will really determine whether cellular networks will survive the competitive edge in the sector will be pricing, coverage, customer care, quality of service and the type of value-added packages offered.”
Vodacom, meanwhile, is gearing up for success and is anticipating some 100,000 customers after one year of operation. It has strategically timed its official rollout to coincide with the Tanzanian general elections in October. Its aggressive plans call for attractive pricing packages and user incentives.
The company expects to have covered Dar Es Salaam, Morogoro, Dodoma, Tanga, Arusha, Moshi, Mwanza and Zanzibar, as well as the international airports in Dar Es Salaam, Kilimanjaro and Mwanza and the tourist areas of Serengeti, by the time of the elections.
The license conditions are similar to Vodacom’s license in South Africa, and Vodacom Tanzania Ltd. has agreed to roll out subsidized community phone shops in Tanzania’s poorest areas, as Vodacom has done in South Africa’s underserved areas.
The Tanzania Communications Commission in Dar Es Salaam issued Vodacom Tanzania Ltd. a license in December. Plans are to spend US$900 million on the new network during the first year of operations and to create 200 new direct jobs within five years.
The South African Vodacom Group owns 51 percent of the shares, and Tanzanian shareholders have the remaining 49 percent. Taking over the reins as acting chairman is Andrew Mthembu, currently managing director of the South African Vodacom operation and chairman of the Africa Interest Group of the GSM Association.
