Vodacom Tanzania bags 4 mil users

By Reuters Time of article published Feb 17, 2012

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By Fumbuka Ng'wanakilala

Dar Es Salaam - Vodacom Tanzania, part of South Africa's Vodacom Group, said on Friday it had boosted total users by a third last year and will spend about $94 million over the next year and a half to expand network and data services.

Rene Meza, Vodacom Tanzania's managing director, said the increase in users came from new customers joining its M-Pesa money transfer service, which has an 85 percent share of the total mobile commerce transactions in the country.

“We added over 4 million customers in one year. The biggest driver for such a growth was M-Pesa,” Meza told Reuters in an interview. He said the firm now had more than 12 million users.

M-Pesa, through which users can buy airtime and make payments, has been popularised in neighbouring Kenya by its biggest mobile operator, Safaricom.

He said Vodacom Tanzania had invested over 1 trillion shillings ($625.00 million) over the past decade to make it the biggest mobile operator in the country.

Meza, who joined the company in September from rival Bharti Airtel's Kenyan unit, said the company's next main focus was to expand its mobile internet service.

“We have very ambitious plans for expansion... the next probably 12 to 18 months will see us spending over 150 billion shillings ($93.75 million) expanding our coverage,” Meza said.

“The mobile internet penetration in Tanzania is no more than 3 or 4 percent as compared to the 15 percent in neighbouring country Kenya, so there is tremendous opportunity for growth.”

Meza said just a third of the 42 million people in east Africa's second largest economy were connected to mobile phones.

Vodacom Tanzania's parent company, Vodacom, a unit of Britain's Vodafone, reported a 12 percent jump in earnings in the third-quarter on Feb. 8, buoyed partly by its mobile data, expected to have huge growth potential in Africa.

Communications is the fastest-growing sector in Tanzania, accounting for 20 percent of gross domestic product. Other major players in Tanzania's mobile phone industry are Bharti Airtel, Millicom's subsidiary Tigo Tanzania and Zantel.

Meza said inflation and exchange rate fluctuations were pushing up costs. He said the company paid its frequency fees to the mobile sector regulator in U.S. dollars while it charged users in shillings.

Tanzania's year-on-year inflation rate eased marginally to 19.7 percent in January, but is expected to remain in double digits in the coming months due to high food and fuel prices.

Meza said he does not expect further reduction of mobile phone tariffs in the country after a fierce price war in the past few years stifled new investments in the sector.

“We have reached a level where we feel comfortable as mobile operators with the level of prices we have, to continue investing and injecting capital in the industry,” he said. - Reuters

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