If Tigo buys Zantel therefore, the market will have three giant
contenders – owning 37, 33 and 30 per cent for Vodacom, Airtel and Tigo
respectively.PHOTO|FILE
By Alawi Masare ,The Citizen Reporter
In Summary
Dar es Salaam. Two mobile operators, Vodacom and
Millicom International Cellular that trades as Tigo, are competing for a
65 per cent Etisalat stake in Zanzibar Telecom (Zantel) as competition
stiffens in the country.
The Emirates Telecommunications Corporation is
working with Deutsche Bank AG on the sale of its 65 per cent stake in
Zantel which has attracted interest from Vodacom Group Ltd and may also
draw Millicom International Cellular, Bloomberg reported.
Whoever wins a stake in Zantel between Vodacom and
Tigo, will automatically become the market leader in terms of data
communication.
This is because Zantel is the local host of the
East African Submarine Cable System (EASSy) – with the project’s landing
station being at the firm’s (Zantel’s) Head Offices at Zantel Park
Drive – in Msasani.
Zantel, along with Tanzania Telecommunications
Company Limited (TTCL), are the local shareholders in the EASSy – an
undersea fibre optic cable that links the countries of East Africa to
the rest of the world. It is thus Zantel and TTCL that are responsible
for selling and distributing capacity to other network operators and
Internet Service Providers (ISP’s). The cable also interconnects with
domestic and international networks. In the same vein, whoever buys a
controlling stake in Zantel will get an additional seven per cent market
share of the country’s telecommunication subscription rates, according
to latest figures by Tanzania Communications Regulatory Authority
(TCRA).
Should the six per cent fall in the hands of Tigo,
it will set a cut-throat competition among three major operators –
where each will be controlling a market share of slightly over 30 per
cent. According to TCRA’s March 2014 subscription market share report,
Zantel had a six per cent share while Vodacom was leading the telecoms
subscription with a 37 per cent market shareholding.
Airtel had a 33 per cent share while Tigo had 24 per cent.
If Tigo buys Zantel therefore, the market will
have three giant contenders – owning 37, 33 and 30 per cent for Vodacom,
Airtel and Tigo respectively. Both Vodacom Tanzania and Zantel declined
to comment anything on the matter and directed all queries to their
respective shareholders.
Meeco International of Tanzania owns 17 per cent
of Zantel and the government of Zanzibar holds 18 per cent, according to
the phone company’s website.
About 57 per cent of people in Tanzania had
wireless access in 2012, compared with a rate of more than 71 per cent
in neighbouring Kenya and 131 per cent in South Africa.
Zantel had sales of about $85 million last year,
according to an Etisalat document published in May. The unit was in a
default for non-payment of a $96 million bank facility, with the lender
saying it may take enforcement action against Zantel unless a payment is
made.
“Zantel cannot comment on shareholders’ related
matter…please refer all your queries to Etisalat group’s corporate
communication,” said Awaichi Mawalla, Zantel marketing communications
manager in a text message.
Another challenging factor about the acquisition is the fact
that Zantel, Tigo and Airtel recently announced a partnership in mobile
money transfers. The three agreed to allow their customers in Tanzania
to send money to each other using Tigo Pesa, Airtel Money or EzyPesa on
their mobile handsets.
Vodacom’s M-Pesa was not included but it denied the claims that it was being sidelined for competition.
On the other hand, Vodacom and Zantel have a
partnership in the usage of network towers – with the latter using the
former’s towers in some parts of Tanzania Mainland.
Vodacom is Tanzania’s largest wireless carrier
with 10.6 million subscribers, while Zantel is the fourth-biggest with
1.7 million as of June, according to the regulator.
Vodacom, 65 per cent owned by Newbury,
England-based Vodafone Group Plc, is also South Africa’s largest
wireless carrier by subscribers. Luxembourg-based Millicom provides
phone services in Africa and Latin America.
African carriers are trying to boost data usage in
a continent where smartphones are prohibitively expensive, fixed-line
infrastructure is scarce and revenue from wireless calls is slowing in
the most developed markets.
Tanzania has 27.94 million telecom subscribers by
June 2014 from all the six operators including Benson and the TTCL,
according to TCRA
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