VODACOM OPPOSES REDUCED INTERCONNECT RATES IN TANZANIA

Telecoms

Vodacom Tanzania Limited said last week that no mobile phone company in the country would be able to maintain its investment and satisfy its customers if the proposed interconnection rates were adopted. Speaking on the second day of the public forum on cost-based interconnection rates in Tanzania, Vodacom Tanzania Managing Director Jose Dos Santos maintained that no company would be able to recoup its investment under the proposed (reduced) rates.

He categorically refused to buy the idea that lowering of interconnection charges would result in lower tariffs. “If reductions in interconnection charges lead to reductions in tariffs, then why do companies fail to lower tariffs for calls among their customers?” he queried. However, other companies dismissed the argument, saying that lower interconnection charges would not only enable them operate profitably, but also enable them to expand their services and introduce new world-class services.

The Zantel Chief Executive Officer, Mohamed Salim, assured the panel headed by retired High Court Judge Buxton Chipeta that his company had been applying a 10 US cents interconnection rate and managed to record a 35 per cent increase in customer base. He said the company already covered a large part of rural Zanzibar with the 10 US cents termination rate opposed by Vodacom.

Termination charges had nothing to do with phone companies’ roll-out plans, Salim said and added that if Zantel would be allowed to operate in Tanzania Mainland today, it could immediately cover six major towns and cover the whole of the country in five to six years’ time at the 10 US cents interconnection rate.

Mobitel Tanzania Limited Company Secretary Francis Buturo said the company would not suffer losses and would continue to render quality services and sustain its adopted roll-out plan if the new charges were introduced.

“Yes, in the past we concentrated in towns, but since early this year, we have adopted a roll-out plan which includes building our own backbone from Dar es Salaam to Mwanza and this plan is not going to be affected by the new interconnection rates,” he said.

He said income from termination charges was not among the major sources of income that kept the company in business.

Salim said the new rates would not hinder competition in the sub-sector as claimed by Vodacom, which insists that the close relations between Celtel Tanzania Limited and the Tanzania Telecommunications Company Limited (TTCL) violated the etiquette of fair competition.

But TTCL Chief Executive George Mbowe challenged Vodacom to provide evidence that the TTCL-Celtel connection denied other players a level playing field. “We like evidence rather than insinuation that our relations with Celtel have an anti-competition element,” Mbowe said.

Celtel Managing Director Steve Torode said the company was very much in favour of competition and urged the authorities to adopt the new rates as a way of stimulating competition among various service providers in the sub-sector.

The Guardian