Tanzania Telecommunications Report Q2 2012

BMI’s Q212 Tanzania telecoms market report contains analysis and forecasts for the mobile, fixed and internet sectors, using market data from the Tanzania Communications Regulatory Authority (TCRA), the country’s leading telecoms operators, including Vodacom Tanzania – part of South Africa’s Vodacom Group – Bharti Airtel-owned Airtel Tanzania and Millicom Internal Cellular-owned Tigo Tanzania.

It also contains analysis of recent regulatory and industry developments that may affect competition dynamics in the telecoms market as well as our five year growth forecasts, through 2016.

According to the TCRA, there were 23.804mn mobile subscribers in Tanzania at the end of September 2011.

This was growth of 7.9% q-o-q and 13.1% during 9M11.

It was also a penetration rate of 51.3%, up from 46.8% at the end of 2010.

BMI notes that growth during 9M11 was driven by strong subscriber uptake during Q211 and Q311, which recorded net additions of 1.041mn and 1.735mn subscribers respectively compared with just 45,000 net additions in Q111.

The market performance in Q211 and Q311 is in line with our view on our previous report that slow growth in Q111 was mainly due to urban saturation, in addition to the discounting of inactive subscribers.

We expect rural roll-out to be main driver of subscriber growth in the future.

We also expect value-added services such as mobile money to appeal to many potential users.

We, therefore, expect the market to continue to record strong subscriber growth during our forecast period as competition and new technologies facilitate network expansion into rural areas.

By 2016 we expect there will be about 41.8mn mobile subscribers in Tanzania, reflecting a penetration rate of 77.5%.

The potentials risks to our growth forecast mainly relate to macroeconomic factors such as rising inflation and currency fluctuation.

In December 2011, the TCRA revealed that high inflation and a weak shilling are key factors in the uptick of mobile phone tariffs in the country.

In response to operators’ concern over these factors, it was reported in December 2011 that telecoms service providers in Tanzania were in talks with the government over paying licence fees in shillings as opposed to US dollars.

Tanzania’s fixed-line sector fell by 0.3% q-o-q during Q311 to 174,678 as a result of net losses by incumbent operator TTCL.

Despite this set back, 9M11 data published by the regulator is in line with our expectations for 2011.

Therefore, we have left our growth forecast for Tanzania's fixed-line sector unchanged this quarter in this update to our report.

We expect continued demand for fixed-line services, most of which are based on CDMA wireless networks, despite the dominance of mobile networks.

According to the TCRA, Tanzania had around 5mn internet users bymid-2011.

This was a penetration rate of about 11%.

Based on the regulator’s data, BMI estimates that the number of internet users in Tanzania reached 6.4mn by the end of 2011.

This was a penetration rate of almost 14%.