JOHANNESBURG, South Africa-Mobile network operator MTN may soon be entering a new African market if it accepts the license offer made by the Tanzanian Communications Commission.
The offer is based on the fact that one of the mobile operators in Tanzania, Tritel, a joint venture between Technology Resources Industries (TRI) of Malaysia and a local company called VIP Engineering and Marketing, is set to lose its license 31 January.
Issack Mruma, public relations executive for the Tanzania Communications Commission (TCC), said the frequency being vacated by Tritel could either be auctioned or tendered. However, the regulator stated it would like to see MTN enter the market based on the success the company has experienced in neighboring Uganda.
Mruma confirmed the MTN subsidiary in Uganda had contacted TCC with details of the offer.
Thomas Bragaw, chief executive of MTN Uganda, said that typically the decision to enter a new market would be taken by MTN International, the investment arm of the group, which would then evaluate the business opportunities presented.
Should MTN take the license it will be the first time it will compete with Vodacom outside their bases of South Africa.
The fact that Vodacom appears to be well entrenched in the Tanzanian market and MTN would be perceived as a “late comer” may discourage the group from accepting the license.
Dobek Pater, senior telecoms analyst at BMI-TechKnowledge, said: “MTN will have to evaluate the market closely, in order to determine whether or not there is still space for it to grow. However, Tanzania is a much poorer market than South Africa, for instance, as far as the average disposable income of individuals is concerned, and growth is not likely to reflect subscriber numbers we have witnessed in other parts of the continent.”
Pater added that MTN would have to build an extensive network, comparable with Vodacom Tanzania’s infrastructure, which would incur significant additional debt, while MTN would have to compete against three network operators that would not be willing to sacrifice market share to the new entrant.
Both Vodacom and MTN have exhibited aggressive expansion strategies into the emerging markets of Africa. MTN has operations in Uganda, Rwanda, Cameroon, Nigeria and Swaziland. Vodacom has a successful operation in Tanzania with licenses in the Democratic Republic of Congo, Lesotho and Mozambique.
TCC has ordered Tritel to settle arrears of US$3.2 million in royalties and regulatory fees dating back to 1999.
