NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, May 5, 2015

Vodacom Tanzania Ltd., the country’s biggest mobile operator, will spend 200 billion shillings ($100 million) expanding its network this year to tap market potential in rural areas and add mobile-money subscribers.

The company, which belongs to a South African unit of Newbury, England-based Vodafone Plc, plans to work with rival operators to provide access to more remote areas hampered by a lack of electricity and roads, said Georgia Mutagahywa, head of corporate affairs. The company wants to increase the number of customers for its mobile money-transfer service, known as M-Pesa, by 25 percent by the end of this year, she said.

Tanzania’s rural population is “where growth will come from in the next decade,” Mutagahywa said in an e-mailed response to questions on April 30. About 70 percent of the country’s 45 million people live in rural areas, according to the National Bureau of Statistics.

Vodacom Tanzania has a 37 percent share of the mobile market in Tanzania. The country has 56 mobile-phone subscribers per 100 inhabitants, compared with 73 in Nigeria and 146 in South Africa — the continent’s two biggest economies — according to data from the Geneva-based International Telecommunication Union.

A lack of connections to the electricity grid and access roads in rural areas is forcing Vodacom Tanzania to connect sites to diesel-fired generators in a bid to grow its current market share, Mutagahywa said. In 2011, only 27 percent of Tanzanians lived in towns, compared with the global average of 57 percent, according to the World Bank.

Economic Viability

“It is not economically viable for a single operator to roll-out to these uncovered areas,” she said. “Tanzania’s lack of power infrastructure has a huge impact on the investment we require.”