East Africa's Telecom Market Has Great Opportunities for Growth

Over 450 telecommunications professionals gathered in Dar es Salaam, Tanzania for the opening of East Africa Com, the region's annual event for the telecommunications industry. The conference started with a keynote presentation from Bashar Arafeh, Celtel International's COO for the East Africa region, who was keen to point out that "East African markets, being currently under market average, hold plenty of room for growth."

He explained how Celtel is leveraging its regional presence and international ambitions to improve networks and offer innovative services, such as the pioneering 'one network' regional roaming plan. He highlighted the importance of a strong brand to take full advantage of market opportunities, and explained that the future move to Zain will help make the brand a fully global one rather than a pan-African group.

He was followed by Dietlof Mare, CEO of Vodacom Tanzania, who also described the great opportunities for telecommunications companies in Tanzania, thanks to political stability, high GDP growth (around 7%, higher than in the rest of Africa), and a penetration rate that is still increasing sharply.

On the other hand, he described the challenges faced by large operators in the rollout of their networks: lack of infrastructure, power issues, increasing fuel prices. Despite those challenges, he described what he thought were the key success factors for Vodacom's leadership in the market: building quality networks (including 3G/HSPA and WiMAX in the main cities for corporate custoemrs) and developing services that meet the customers' needs. As an example, he announced the launch of Vodafone's M-Pesa payment service (pioneered in Kenya by Safaricom) at the end of the month in Tanzania.

Many Tanzanians - like most of their neighbours in Kenya, especially in rural areas - have difficulty accessing conventional bank accounts and M-Pesa is seen as a convenient way to send money. Safaricom recently said that in the 11 months since it launched M-Pesa in March 2007, it had handled 9.3 billion Kenya shillings (US$147.9 million).

Vodacom Tanzania is 65%-owned by South Africa's Vodacom with the rest held by private Tanzanian investors.

Africa's GSM mobile subscriber base is expected to jump by 20% to 316 million between now and the end of the year. GSM Africa, the African arm of world body GSM Association, said at the conference that penetration was expected to top 34% by the end of the year, from 29% at the end of 2007.

The number of subscribers will rise from 263 million to 316 million this year, Vitalis Olunga, Chairman of GSM Africa, said in a presentation at East Africa Com. Olunga said GSM networks were comprised of a bulk of service providers on the continent, with an average of about 140 live networks at the end of 2007.

Growth in mobile telephony has been swift in Africa, where fixed-line networks have been largely patchy in many countries and subscribers are often subjected to bureaucratic red tape before being connected.

Both speakers from Celtel and Vodacom Tanzania mentioned competition and the resulting price decline as a major challenge in the markets. Mare pointed out that new players dropping prices affect long term profitability and the investment level necessary for future network deployment in a market.

Arafeh, on the other hand, welcomed the entry of two new operators in Uganda. One of them, Warid Telecom, was represented by its CEO Zul Javaid at the conference, who described its launch and future strategy in the market. Other speakers in the first day plenary included representatives of Tanzania's regulator TCRA, MTN Uganda, Ericsson, Huawei, and Vimpelcom

Posted to the site on 8th April 2008