Tanzanian telecoms regulators have succeeded in making the country's communications sector one of the most competitive in the region. Nonetheless, new regulations are pushing the sector further and reshaping the telecoms landscape.
Since 1993, the Tanzanian telecoms market has slowly but surely been de-shackling itself from the public sector. In 1997, a new national telecoms policy was launched to ensure that the market was liberalized and competitive, and in 2001 the state-owned Tanzania Telecommunications was partially privatized. The focus has since been on attracting as many operators as possible to increase the competitiveness of the sector. That strategy has largely been effective from the consumer’s point of view, and has resulted in some of the world’s lowest data rates, as well as over 90% mobile penetration.
Nonetheless, a few recent regulatory and market-led developments are poised to transform the market. One is tower companies buying and holding infrastructure built by telcos, which lowers costs and barriers to entry and eases conditions for mobile virtual network operators. Another important change is in mobile money regulations that will see telcos split their mobile money operations from their traditional operations. From 2017, operators will also be forced to list on the Dar es Salaam Stock Exchange (DSE).
Tower firms like Helios Towers, IHS, and American Towers have received billions in investments from international investors and have acquired large chunks of the telecom infrastructure across Sub-Saharan Africa. These specialist companies focus on building and managing infrastructure, primarily towers, a task that up until now ate vast chunks of telcos’ budgets. The upside is that towers across the country are now independently owned, and new entrants no longer have to build their own infrastructure. Equipment from multiple operators can now be installed on the same tower, reducing costs and leveling the playing field for the entire market.
That market development may make mobile virtual network operators (MVNOs) more competitive. The first MVNO, Amotel, was licensed in 2015 and works with the government to provide coverage to distant rural areas. In others parts of Africa MVNOs have carved out significant niches and helped to bring down prices of data and voice overall, although they typically lack the brand strength to compete with established multinational players. Shared towers will also make competition cheaper for Halotel, the Vietnamese state-owned telco that is the market’s newest entrant.
All of these factors encourage competition and growth in the Tanzanian market, but there is a parallel development that may have the opposite effect. President John Magufuli has sworn to aggressively enforce a clause in a 2010 act titled the Electronic and Postal Communications Act (Epoca), which requires foreign owned telcos to list 20% of their shares on the DSE. Under former-President Jakaya Kikwete, the act was not enforced, likely due to concerns over the illiquidity and volatility of the exchange, but in June of 2016 the national assembly passed a finance bill that included an order for operators to list.
Although telcos have good reasons to oppose listing, they have been treading carefully under Magufuli. In an interview with TBY, Sunil Colaso, the Managing Director of Airtel Tanzania, said “We are all committed to the listing process as an industry and the sector has already started moving in that direction. The good news for Airtel is that the government and, therefore, the people of Tanzania already own 40% of Airtel, so we do not see the need to list on the local stock exchange as a major issue.”
Taxation is also a looming issue in the Tanzanian market, and threatens to undermine Tanzania’s status as the first country to implement mobile money interoperability, a major landmark. Despite these potential regulatory setbacks and thin margins created by competition, the Tanzanian market is a good place to be. Data is very much the new frontier. According to a 2015 Tanzania Communications Regulatory Authority report, data users grew by 52% that year, reflecting a population that is purchasing smartphones at a very high rate. Regulation has positioned the market very well to take advantage of this dominant data consumption trend, and Tanzania’s telecommunications market looks to be poised for growth.