FOUR OF DUTY

Tanzania 2014 | TELECOMS & IT | INTERVIEW

TBY talks to Fiona McGloin, Country Manager of Smile Communications, on the potential for 4G in the market and absorbing new taxes.

Fiona McGloin
BIOGRAPHY
Fiona McGloin has worked in the mobile communications industry since 2002. She was the COO of Digicel Pacific, based in Haiti, and the COO of Bintel Limited in Lebanon before joining Smile in 2012. She brings to Smile a strong management background and experience of introducing a variety of mobile services to emerging economies.

Could you describe your business model and plans for expansion?

4G, namely fourth-generation technology, marks a huge leap forward, particularly in terms of data quality. Currently, we do not offer voice services, but will do in early 2014, and have already completed our first test calls. The real delay is the high cost of the handsets that are only just reaching the market. We started out just with routers, but now also have dongles, we have just launched Mi-Fi's, and our Wi-Fi hotspot service were launched in 3Q2013. Even in devices we have noticed a price decline over the past year, which had been one of the main barriers to entry. We are currently in Dar es Salaam and are expanding our coverage of the city in 3Q2013 and out to certain regions by 4Q2013. By the end of 2014, we should be covering all major cities and towns nationwide. Beyond that, we will need to think altogether bigger.

What is the potential for 4G in this market?

The internet has become increasingly important worldwide. And in a country with less developed infrastructure, it can take on more importance in some ways than in a developed market. If the transportation system is inadequate, say, it is easier to do business online. This is one issue. Additionally, the price of the devices themselves is declining, and I am sure that this will also be the case for smart phones, as lower-end and cheaper versions reach the market, many produced in China. We are seeing a greater uptake, and I think the fact that the quality of LTE is excellent makes it worthwhile. We are hearing feedback that customers are using it much more because the quality is that much better with LTE 4G technology. Because a smart phone is fast and application rich, you can do so much on it, and being able to connect via LTE really enhances the experience. With our routers, even if it's not an LTE phone, any Wi-Fi enabled device can be used, such as a BlackBerry, laptop, Kindle, or printer.

Where else is Smile present?

We launched our services in Uganda on June 6, 2013. We will launch officially in Nigeria in early 2014, but already have a live network and commercial customers in Ibadan. We have yet to commence business in the Democratic Republic of Congo, but will do so shortly.

How do you confront the challenges of being the first in the market?

For us, it is all about experience. I think that people who are not in telecommunications themselves don't care about 2G, 3G, or 4G; they simply care about what it does. The way to get people using it is through experience. Much of our advertising involves showcasing; the bulk of our budget does not go on above-the-line marketing, such as billboards. Instead, we organize many events to let people experience our products first hand. People visit our stores out of curiosity, and we also have around 20 free hotspots around the city where people can experience the service. This is the best way to convince them. And once people see how fast our network is, it's hard to go back to what they had before.

Are there more investments planned for the future?

Yes, absolutely. More sites were introduced September and October of 2013, with coverage of all major areas of Dar es Salaam. The next target is coverage on the outskirts of the city and at least one region beyond Dar es Salaam. In 2014, we should have coverage of all of major cities in Tanzania.

The government has recently announced new telecommunications taxes. What problems do they present for you?

We have had to increase our pricing to absorb the impact of the increased tax rate. This works out at about an 18% increase, once you add VAT. It really affects us because the definition of “telecoms" has been amended to include electronic communications instead of straightforward telecommunications. Operators already paid these taxes at 12.5% so it amounted to a 2% increase, but for the ISPs it was a 14.5% hike.