Low penetration in Tanzania leaves plenty of room for growth over the next five years, but operators need to capitalise on the rural market potential.
The latest data from the regulator shows that there were 21.028mn mobile subscribers in the country at the end of March 2011. Although q-o-q growth of just 0.2% in Q111 was significantly less than previous growth rates, this does not suggest market saturation, considering mobile penetration rate is still less than 50%.
Instead, it is more likely indicative of saturation in urban areas where only 30% of the population live. This implies there is significant scope for subscriber growth in rural areas, but actualisation of this potential is dependent on the ability of operators to identify and implement cost-effective strategies for rural rollout.
Competition and new technologies are facilitating network expansion into rural areas, which is likely to drive subscriber growth over the next five years. By 2016 there will be about 37.7mn mobile subscribers in Tanzania, reflecting a penetration rate of 70%.
While rural roll-out presents a viable opportunity for future subscriber growth, there is an increasing likelihood of operators choosing to roll out high value services such as mobile data in urban areas, where income levels are higher as opposed to network expansion to rural areas. This is driven by the limited correlation between subscriber growth and revenue growth mainly because of low ARPUs and MoUs. Meanwhile, the increasing availability of international bandwidth from submarine cables and low-cost data-enabled devices are driving the uptake of 3G services and other premium value-added services.
Tanzania’s fixed-line sector recorded positive growth during Q111 with net additions of 366 lines. Although this was fewer than 1,860 net additions registered in the previous quarter, the positive growth is indicative of continued demand for fixed-line services. Most of these are based on CDMA wireless networks, despite the dominance of mobile networks. Fixed-line subscriptions are on course to reach 193,000 by 2016.
New historical data published by the TCRA and the ITU show higher internet penetration, but lower broadband penetration by the end of 2010 than previously expected. Internet and broadband penetration are expected to reach 29% and 3.3% respectively by 2016, driven by increasing access to wireless access technologies.
