High Spending On Calls Fails to Reflect in Telcos' Earnings in Tanzania

Telecoms

Tanzanians' spending on mobile telephones has grown to $396 million (TSh555 billion) in three months, but this did not reflect on the telecommunications profits owing to high operation costs. According to a report by the Tanzania Communications Regulatory Authority (TCRA), the money was spent by 20,771,487 subscribers between July and September 2010.

This is Sh37.475 billion more than what was spent on voice communications and short message services (SMSs) in the preceding quarter (April-June, 2010) and slightly higher than the total government revenue for the whole month of September 2010 which stood at Sh502.5 billion.

"If you calculate, you really get a huge amount, but that does not reflect the profits that the companies make...the amount also encompasses what the firms spend on investment activities, taxation, salaries and other expenditures," the TCRA director general, John Nkoma said. In some areas, there are no roads so companies have to construct their own roads as they seek the right place on which to build a tower, he said. Tanzania also faces power challenges, forcing companies to invest in backup plans. "They collect a lot of money, but they also spend a lot of money at the same time," Mr Nkoma said.

The high figures comes at a time when the seven telecommunication companies, Vodacom, Airtel, Tigo, Zantel, TTCL, Sasatel and Benson Informatics (BOL) are scrambling for customers using low pricing as the arsenal of gaining market dominance.

According to the report, the amount of money, on average, that the country's telcos brought in from each client (Average Revenue Per User--ARPU) stood at Sh26,724 during the three months from July to September, 2010.

During the second quarter of 2010, the country had a total of 19,592,795 subscribers.

The ARPU for April to June 2010 was Sh26,419, indicating that Tanzanians spent an estimated Sh517.622 billion on both voice and SMSs between April and June, last year.

Vodacom remained the market leader, boasting of 8,426,097 subscribers with Airtel coming second with 5,901,634 subscribers as Tigo came third with 4,575,534 subscribers.

Having recorded a historic 1,888,739 subscribers in June 2010, Zantel may have failed to go on with the tide. The company lost 302,223 subscribers between July and September to remain in the fourth place, though with 1,586,516 subscribers.

Tanzania Telecommunication Company Limited had 256,064 subscribers while Sasatel had 23,071 subscribers as BOL seems to be nowhere close to any competing giant. It increased just 165 new subscribers between July and September to bring the total number of its clients to just 2,571.