Tanzania’s mobile market is expected to experience robust growth, albeit overcrowding and state interest pose key risks to the forecast, Fitch Solutions forecasts.
According to Fitch Solutions’ Telecoms Risk/Rewards, Tanzania scored 43.5 out of a potential 100 points. This is due to positive demographic data and a new mobile market growth data showing promising uptake of advanced services.
“Tanzania moves up seven places to 10th position on our Telecoms Risk/Rewards Index for Q4 2021, mainly attributed to an increase in its Industry Rewards score.
“The mobile market, and mobile data services in particular, will be the key growth vector during our 2030 forecast period.”
Fitch Solutions
Meanwhile, pertaining to the industry risks pillar, Tanzania scores highest, scoring 54.0 out of 100 points. Among the benefits that the market enjoys include a proactive regulator in the Tanzania Communications Regulatory Authority (TCRA). The regulator’s presence has proved to be highly responsive to the needs of consumers, Fitch Solutions asserts.
Early last year, the regulator instructed operators to create tariffs which prioritized consumers’ interests. However, the government’s increasing interest in the sector has tested the regulator’s ability to withstand influence and remain independent.
That notwithstanding, the country’s lowest score on the Industry Rewards index, scoring 41.5 out of 100 points.
The mobile market has grown 9.5 per cent year-on-year to 52.7 million subscribers at the end of 2020, for a penetration rate of 86.9 per cent. However, a number of players have found it challenging to operate in the market.
Downside risks to mobile market growth
For instance, the embattled Smart Telecom is the most recent player to withdraw (only five years after its entrance). This follows an experience of a sharp decline in subscriber numbers from 1.6 million at end-2015, Fitch Solutions indicates.
Another includes Smile Telecom, which Fitch Solutions argues will follow Smart Telecom, despite its recapitalization in 2021.
Fitch Solutions believes that with the crowded market now hosting seven players, greater consolidation is necessary. This will occur if the country seeks to go ahead with plans of advancing beyond Average revenue per user-dilutive price competition.
“On the downside, mobile market overcrowding will continue to depress ARPUs while state influence over the sector will continue to weigh on an otherwise proactive sector regulator.”
Fitch Solutions
Accordingly, this will stimulate focus on higher value urban areas, to ensure growth through network expansion and service diversification.
Also, the Tanzanian mobile market benefits from an improved country risk score of 41.6 points. Expectations are that this will increase as President Samia Suluhu Hassan has strengthened her position following a cabinet reshuffle at the end of March 2021 as well as progress made regarding the COVID-19 pandemic.
In terms of Country Rewards, a score of 42.0 points is sustained by a promising outlook of demographic data. This shows a sizeable youth population, with over 40% falling within the ages of 15 to 39 years in 2021.
The country’s urbanization rate is on the rise, expected to grow from 36.0% in 2021 to 42.4% by 2030.
“Our Country Risk team also expects GDP per capita levels of US$1, 279 for 2021 to grow to US$ 2, 303 to 2030.”
Fitch Solutions
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