Tanzania’s 4G investment opportunities

Posted on January 27, 2017 12:00 am

Tanzania’s deployment of 4G, combined with increasing demand for advanced IT services, is set to drive growth East Africa’s largest country’s telecoms sector.In simple definition, 4G is the fourth generation of mobile wireless technology standards, with the generation denoting the standards of network coverage and speeds, along with services provided. No doubt 4G offers smoother and quicker data transfers. Much of the demand is predicted to come from Tanzania’s rising middle-income segment. It is estimated that at least 40m people in the country, approximately two third of the population will fall within the middle and affluent earnings brackets by 2025, according to a study, deepening the potential client pool. New products and services are also expected to pave the way for increasing opportunities for foreign investors in a market where mobile phone subscription levels are already at near saturation point. Currently, Tanzania has more than 40m mobile subscriptions, with a penetration rate of around 80%, according to the Tanzania Communications Regulatory Authority.Three of Tanzania’s mobile telecoms providers have began rolling out 4G namely Vodacom, Tigo and Airtel after the government granted them licences for the advanced network services recently. The operators will hold the rights to 4G services for a stipulated period. As the country’s three major telecoms companies, which together account for 90% of the market have all run pilot 4G programmes with Vodacom jostling for market control with their perennial competitors Tigo. Tanzania’s others carriers have yet to be given approval to take the step up from 3G.The operators have already moved to put the necessary infrastructure in place to carry out 4G services, according to official reports from Tanzania Communications Regulatory Authority.The launch should also go some way to advancing the Tanzanian government goal to have at least 95% of the population have access to 3G or 4G services by 2025.The introduction of 4G services is expected to fuel a rise in new products and open opportunities for investors. Currently, out of Tanzania’s 35m 3G subscribers, only 8% have devices, such as phones and handsets, which are compatible with 4G services. Of course, the growth of 4G networks and 4G compatible devices has been complementary, with the rapid take-up of smartphones in general, be it on a 3G or 4G network.

Entry to Vodacom Tanzania head offices located at Mlimani City, Dar Es Salaam in this picture I took couple of years back
Entry to Vodacom Tanzania head offices located at Mlimani City, Dar Es Salaam in this picture I took couple of years back

Your blogger has data that shows there were 9.3 million Tanzanian smartphone users at the end of 2016, amid signs emerging that the market is nowhere near saturation, with 3,500,000 new smartphone users expected to added this year.Tanzanians, in turn, are increasingly taking to their smartphones to access the internet, doing so via 3G and 4G networks.Tanzania has recorded a steep growth in data downloads via mobile handsets in recent times, revealing that more 350,000 TB was downloaded in the six months ended December 31, 2016. That’s up from 242,000 TB in the same period of 2015.Tanzanian consumers are hungry for the latest technology and biggest data deals. In fact, data offers have become a key battle ground for telcos, with most now focusing on improving their 4G networks and handset offers with Tigo Tanzania being the undisputed market leader.A quick browse of the respective Tigo, Airtel and Vodacome websites reveals the heavy emphasis placed on 4G, with an ever-growing range of new smartphones now being sold 4G-capable.While to date there has been plenty opportunities for foreign investment in Tanzania’s telecoms sector, the shifting focus of the industry away from traditional services, such as voice and messaging, towards digital and data products should open doors for investors.With the trend of convergence of telecoms with IT, content sharing and value-added services are now playing increasingly important roles in creating revenues for operators.The transformation to digital services has created many opportunities for investors in Tanzania, such as deploying platforms, cloud computing and big data services.This transformation means that foreign firms and investors with services that are applicable to the Tanzanian market may increasingly look to develop cooperative ventures with local telecoms operators. While the 4G rollout continues around Tanzania, the next generation of mobile telecommunications technology is also on its way, with the groundwork being laid for the eventual deployment of 5G wireless mobile technology standards. While 5G is gaining a lot of media attention, it is likely still a few years away, and like the generations that have already come and gone will be subject to an ongoing rollout. It is likely that 5G will deliver an additional set of use cases, with special focus on Internet of Things. Indeed, amid the rapidly increasing amount of connected devices, how all of these devices will be tied together is a point of interest. As per usual in the technology industry, it is a case of watch this space for further developments and Tanzania isn’t in the mood of being left behind.

Contador Harrison