April 20, 2018 / 4:43 PM / 2 years ago

Vodacom Tanzania bets on data and mobile money to stay on top

NAIROBI (Reuters) - Vodacom Tanzania is focusing on growing its data business, mobile payments system and cloud services to stay on top of the East African nation’s competitive telecoms market, the head of the company said on Friday.

Investment in these areas will ensure the company retains first mover advantage, managing director Ian Ferrao told Reuters.

Vodacom VODA.TZ controls 32 percent of the country’s 40 million mobile subscribers, ahead of companies including Tigo Tanzania, a subsidiary of Sweden’s Millicom MICsdb.ST, and a local unit of India’s Bharti Airtel (BRTI.NS).

In 2016 Vodacom launched a payments system enabling its 8 million mobile money subscribers to make payments to more than 10,000 merchants, from small shops to restaurants.

“I’d like to see this get to 100,000 merchants in the next couple of years, so that everywhere you go you can pay using M-Pesa,” Ferrao said.

A little more than half of Tanzania’s total mobile subscribers have mobile money accounts, national regulator data shows, suggesting room for growth.

“If you just look at China, where 90 percent of payments today are made through a mobile phone using various apps, it has completely transformed the Chinese economy,” Ferrao said.

“I think Tanzania can be the leading country across Africa driving this mobile payments strategy.”

Another growth area is data, he said. More than 50 percent of the country’s mobile phone users are accessing the internet using their phones, according to the regulator.

Vodacom allocated about three quarters of the 600 billion Tanzanian shillings ($263.4 million) it spent on network infrastructure over the past three years on expanding mobile broadband services, he said.

It is subsidising devices on its network so that consumers can buy cheaper smartphones, he said, because the issue keeping many people from accessing the internet is the cost of smartphones.

The government could help to address this issue by reducing the tax on imported phones, he added.

Regulatory uncertainty and taxes on mobile operators that Ferrao said are among the highest in Africa are creating barriers to more investment, he said. Close to 40 percent of the company’s revenue goes on taxes, directly or indirectly.

“That (high) taxation just brings a barrier to unlocking the levels of investments that are required to be growing next-generation networks.”

Ferrao is leaving Vodacom in June after leading the company through a $213 million initial public offering last year.

Vodacom’s IPO was in compliance with a government directive for mobile companies to list a minimum 25 percent stake on the local stock exchange. It is the only company to have complied.

Vodacom has also begun offering cloud technology to businesses.

Reporting by Omar Mohammed; Editing by Maggie Fick and David Goodman

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