One of the most bullish outlooks of any sector in the country can be found in Tanzania’s telecoms industry. Already a model for development in sub-Saharan Africa, the sector has recorded rapid recent growth in activity, supported by some of the lowest user tariffs in Africa, speedy smartphone and mobile broadband uptake, and steady investment in infrastructure and next-generation service expansion. As is the case in many of Africa’s telecoms markets, the mobile money and data segments are forecast to drive mid-term growth. Both have recorded dramatic gains in subscriptions and transaction values and volumes over the previous decade under a supportive regulatory environment.

Sustaining growth will require telecoms operators to navigate a handful of obstacles, including one of the highest taxation rates in Africa, as well as a recent push by the government to expedite required initial public offerings (IPOs) on the Dar es Salaam Stock Exchange (DSE). That said, there is a silver lining. The requirement that telecoms operators list on the local bourse has been accompanied by a move by the government to change its IPO regulations, allowing foreign investors to purchase shares. Rising foreign investment, improved rural coverage and data-driven growth should help the sector remain at the forefront of EAC telecoms developments over the next 12 months.

Recent Growth

Headline indicators highlight the rapid expansion of the country’s sector over the last five years. The Tanzania Communications Regulatory Authority (TCRA) reported that the total number of voice subscriptions in Tanzania, including mobile subscriptions, rose by 16% from 27.6m in December 2012 to 32m in December 2014. Voice subscriptions rose to 39.8m in December 2015, an increase of 24%, while 2016 saw a rise of 1%, ending the year at 40.2m subscriptions. Fixed-line subscriptions have trended in the opposite direction, falling from 176,367 in 2012 to 164,999 in 2013, 142,950 in 2014, 142,819 in 2015 and 129,597 in 2016. Although fixed-line penetration remains extremely low in Tanzania – at 0.2%, according to a June 2017 brief published by telecoms research firm BuddeComm – mobile penetration had risen to 83% as of March 2017. The TCRA, meanwhile, reported that voice subscriptions contracted in the first quarter of 2017, totalling 39.9m in March.


The contemporary history of the sector began with the Tanzania Posts and Telecommunications Corporation Act of 1977, which established and incorporated the Tanzania Posts and Telecommunication Corporation (TPTC). The TPTC was responsible for providing postal and telecoms services, as well as regulating and controlling radio communications.

The sector saw a significant overhaul in the 1990s as the country shifted to a more liberalised set of investment policies, which included the privatisation and reorganisation of telecoms providers and regulators. The Tanzania Communications Act of 1993 restructured the TPTC into three separate entities, including the Tanzania Communications Commission (TCC), which was the first independent telecoms regulator in the country and region, and was among the first 30 independent telecoms regulators globally.

The TCRA was established under the Tanzania Communications Regulatory Act No. 12 of 2003 to regulate the communication and broadcasting sectors, assuming the functions of the TCC and the Tanzania Broadcasting Commission. The TCRA is responsible for managing the national frequency spectrum; issuing, renewing and cancelling licences; setting the regulatory framework for telecoms goods, services and supply chains; regulating rates and user charges; and monitoring investment levels, service quality costs and efficiency. It also handles disputes between operators and consumers.

Tanzania Telecommunications Company Limited (TTCL) was the third entity created by the TPTC’s split in 1993, becoming the country’s first corporate fixedline operator after receiving a licence from the TCC in late 1994. TTCL was then partially privatised just under a decade later. Dutch-headquartered Celtel International and Germany’s Detecon International formed a consortium and acquired a 35% stake in the company in February 2001 for $60m. In line with the concurrent regulatory overhaul the company was given a four-year period of exclusivity by the regulators for providing fixed-line telephone services expiring in 2005, after which the market would become fully liberalised.

Licensing & Regulations

From 2005 onwards Tanzania overhauled its licensing framework to boost competition across both fixed and mobile segments. The old framework prohibited cross-category activities, meaning a fixed-line provider could not be licensed to provide mobile services. The new framework significantly reduces the regulatory requirements for licence approvals. The new Converged Licensing Framework (CLF) employs a horizontal licensing approach that is technology- and service-neutral, allowing any licence holder to provide any service using any technology. Under the CLF only four major types of licences for telecoms service provision are available – network facility, network service, application service and content applications service – against seven previously.

A range of regulatory frameworks were introduced in 2005: broadband services; consumer protection; content; licensing; import and distribution; installations and maintenance; interconnection; postal services; radio communications and frequency spectrum; tariffs; and electronic communications equipment approvals. All mobile operators in the country are now required to offer a 25% stake of their firms on the DSE under the Electronic and Postal Communications Act of 2010, although none had done so by June 2016, prompting the administration to pass legislation ordering any telecoms operators licensed in the country to list within six months. Since then, the three largest operators – Vodacom, Tigo and Airtel – have submitted prospectuses, and Vodacom has conducted its first listing.

Mobile Segment

As is the case in most emerging and frontier markets, Tanzania’s mobile sector has seen significant growth from very modest beginnings just over two decades ago. The sector began in the early 1990s with a single entrant, but now has seven operators. Luxembourg’s Millicom International Cellular was the first arrival, launching Mobitel following the award of an analogue network licence from the TCC in 1993. The operator – which was part of Millicom’s Tigo group of mobile providers – was rebranded to Tigo, following Millicom’s eventual buyout of the other original shareholders in 2006, including the government of Tanzania, which originally held 26%, and local firm Ultimate Communications, which owned 16%.

Zanzibar Telecom (Zantel) was launched by a joint venture between the government of Zanzibar and a private firm based in Ireland that invested $25m to launch fixed and mobile services to consumers in Zanzibar and Pemba Island in 1999. Abu Dhabi’s Etisalat had acquired a 51% stake in the company by October 2007, later upping its share to 65% in April 2010 and 85% in October 2014. Millicom announced in October 2015 that it had acquired Etisalat’s 85% stake in Zantel, although the company was not rebranded under the Tigo name and still operates as Zantel. The government continues to hold a 15% stake in Zantel.

Vodacom Tanzania, a subsidiary of South Africa’s Vodacom Group – itself a subsidiary of the UK’s Vodafone – was the next operator to enter, following the award of a licence in 1999. According to the TCRA, it is the largest operator by market share in Tanzania. It began operations in 2000, reaching 50,000 subscribers within the first four months of operation – more than the total number of subscribers in the country when the licence was first awarded. Until recently Vodacom Group owned a 65% stake in the company, while Tanzania’s Mirambo held the remaining 35%.

Airtel was the next to enter the market, although it has since gone through a number of ownership changes. In 2005, after the rollout of the CLF, Celtel – one of the shareholders of TTCL that, following its privatisation, was restructured to become a separate entity – was awarded a network service licence. Celtel retained its stake in TTCL, while the government of Tanzania held a 40% stake in the separate Celtel entity. As part of a continent-wide acquisition, Kuwait’s Zain subsequently bought Celtel’s operations – including its TTCL stake – in 2007. India’s Bharti Airtel in turn acquired Zain’s Africa operations in 2010, rebranding Zain Tanzania to Airtel Tanzania.

Vodacom, Airtel and Tigo are the dominant mobile operators in the country, while four smaller operators have a market share of less than 15% between them: Vietnam’s Viettel subsidiary, Halotel, which entered the market in October 2015; Smart Telecom, owned by Kenya’s Industrial Promotion Services; and, launching operations in April 2014, TTCL and Zantel. Vodacom is the largest player, holding a 32% market share in the first quarter of 2017, followed by Tigo with 28%, Airtel with 26%, Halotel with 9%, Smart and Zantel with 2% each, and TTCL with 1%. Although there has been some turbulence in the middle of the market following Smart and Halotel’s entrance, as well as some change in dominance among the top three companies, market share has been relatively steady over the past five years. In December 2012, for example, Vodacom held a 34% market share, followed by Airtel with 30%, Tigo with 24%, Zantel with 11% and TTCL with 1%.


As is the case with many other legacy operators around the continent, TTCL has had to grapple with a range of challenges as competition in the sector has gradually increased over the years. The company has been constrained in part by decades of underinvestment, as well as by persisting operational issues between the government and contractors. In February 2007, for example, Canada’s SaskTel was awarded a three-year management contract for TTCL in a bid to improve service delivery, customer numbers and revenues. The firm was unsuccessful and terminated its contract in July 2009, having failed to raise the funds necessary to support its transformation agenda or secure a government guarantee for a $1.5m loan needed to fund various projects.

TTCL has reported consistent losses and underinvestment. In April 2016 the parliamentary Public Investments Committee (PIC) reported that the firm had incurred losses for 15 consecutive years, and that the government failed to invest in its operations over the same period. The company’s accumulated losses stood at TSh334.5bn ($152.1m) at the end of 2014, with the PIC calling for a restructuring to help return it to profitability. The government has recently moved to renationalise TTCL, with a major planned investment and new service offerings expected to help it regain its footing and end decades of losses (see analysis).


In line with telecoms markets around the world, data is underpinning much of the growth in mobile subscriptions and revenues. Vodacom Tanzania initiated the development of 3G in Tanzania in February 2006, announcing plans to introduce a 3G network to the country by the year’s end. Partnering with Siemens in that same year as part of a $126m investment to upgrade its broadband offering, the company initiated services using a high-speed downlink packet access platform. Following this, in February 2007 the country’s first commercial 3G services were launched in Dar es Salaam, and subsequently rolled out in Dodoma and Arusha. Plans to upgrade Vodacom’s 2G and 3G networks were revealed in February 2015, with the company announcing it would invest TSh150bn ($68.2m) in the project and expanded rural coverage as well.

Zain Tanzania and Zantel followed suit soon after. Zain Tanzania introduced what it claimed was the fastest 3.5G mobile internet service in the country in 2008. In 2012 Zantel launched a 3G/3.5G network in Zanzibar, while its mainland 3G network was launched in Dar es Salaam in late 2014. Also, in 2014 Halotel reported its plans to invest up to $1bn to launch 3G services.

Next Generation

In April 2012 Tanzania’s 4G development commenced, beginning with Smile Communications Tanzania, a subsidiary of Uganda’s Smile Communications. A pilot trial of 4G LTE services was set up in Dar es Salaam, followed by complete commercial expansion in the city in June 2012, with the aid of LTE technology supplied by Alcatel-Lucent (see IT overview).

These network upgrades have been made possible by an increase in bandwidth capacity. Between 2009 and 2010 Tanzania became connected to the East African Submarine Cable System (EASSy) and SEACOM African undersea cable systems, as well as the East African Marine System cable via a cross-border connection with neighbouring Kenya, which has had a major impact on internet capacity. Today the country is directly connected to six submarine cables: EASSy, SEACOM, Africa-1, the Djibouti Africa Regional Express, Liquid Sea and the Seychelles East Africa System.

Mobile Money

The mobile money transfer market also holds significant potential for future expansion, thanks to increased data capacity. Vodacom Group, which is a minority shareholder in Kenya’s Safaricom, launched the M-Pesa service in 2008, a year after it was piloted in Kenya. At the time the country’s financial inclusion rate stood at just 16%, with the vast majority of Tanzanians unbanked and lacking any access to formal financial services. In the years that followed a number of other similar services were launched.

Tigo followed suit in September 2010 with its Tigo Pesa service, and in December 2011 Airtel launched its Airtel Money transfer service after introducing Me2U, a phone-to-phone airtime credit transfer service, in 2005. Airtel was the first mobile operator in the country to introduce this. Zantel, which had launched mobile money services with limited success in 2008, relaunched its Ezy Pesa service in January 2012.

While the first couple of years saw only modest levels of activity, by 2010, as new entrants arrived, activity began to pick up significantly. In December 2012, the Bank of Tanzania (BoT) reported that the number of monthly mobile money transactions had risen from 1.9m in 2010 to 48m in September 2012, with the value rising to TSh1.7trn ($773.2m) from just TSh1.8bn ($818,000) in 2010. The World Bank reported that both the total value and the volume of mobile money transactions in Tanzania grew at double-digit rates between 2008 and 2015, at which point it reached a value of TSh42.9trn ($19.5bn), or 47% of GDP.

Subscriptions have enjoyed a similarly robust performance. While it did not track mobile money users prior to mid-2015, the TCRA reported that the total number of mobile money accounts in Tanzania rose from 14.3m in July 2015 to 17.6m in December, up 23.1%, then reaching 18.1m by the end of 2016, a further increase of 2.8%. The number of mobile money subscriptions rose by 6.1% in the first quarter of 2017, to 19.2m, meaning the sector grew by a cumulative 34.3% in less than two years. M-Pesa is currently the largest service, with a 41.4% market share in the first quarter of 2017, followed by Tigo Pesa with 31.6%, Airtel Money with 25.4% and Ezy Pesa with 1.6%. Mobile money is becoming more popular, as customers tend to feel safer with a mobile wallet, as they cannot be physically robbed.

Moreover, the impact on financial inclusion has been significant. According to a 2017 World Bank report, around 62% of Tanzanians have access to basic financial services through either conventional banking systems or mobile money providers, up from approximately 11% in 2007. This enabled the country to surpass its own financial inclusion target of 50% of the population by 2016. Furthermore, the launch of Mastercard’s Masterpass and Visa’s mVisa mobile money services are set to foster even more competition for merchant payment space in 2018, as well as create opportunities for third-party service providers.

Government Solutions

In April 2017 the government established the Government Electronic Payment Gateway system for both revenue collection and payment disbursement. This initiative should not only increase transparency and accountability, but it is also expected to boost person-to-government and government-to-person payments and bring more state institutions online for payment processing. Increased public investment in mobile money solutions is likely to create more opportunities for IT firms to provide a range of services as more public agencies seek to update their payment systems.

Regulatory Support

Tanzania is far from the only country in Africa to roll out mobile money services, but it – along with Kenya – has been one of the most successful in doing so, largely due to the country’s supportive regulatory environment. The TCRA signed a memorandum of understanding with the BoT to regulate mobile money services in February 2011, and the segment has benefitted from progressive regulatory support since. The GSM Association (GSMA) reported in September 2016 that from the earliest days of mobile money regulation, the BoT sought to create a conducive “test and learn” environment to facilitate the launch of diversified products, including profit distribution channels, savings accounts, trust funds and loan products.

Agent interoperability has also seen major growth, and the GSMA reports that the BoT began encouraging discussions on account-to-account interoperability as early as 2013, following which Tigo and Airtel agreed to a bilateral account interoperability in September 2014. In December 2014 Tigo also connected with Zantel, and in February 2016 Vodacom announced connections with Airtel and Tigo. Most recently, Airtel, Tigo and Zantel launched an integrated mobile money platform, Taifa Moja, in April 2017. TTCL, for its part, announced plans to launch mobile money services in May 2016.


Although opportunities for investment in new and upcoming mobile financial services and next-generation infrastructure have helped to bolster the sector’s longer-term growth outlook, the relatively high tax rates and low consumer tariffs could weigh on profitability in the coming years.

The TCRA has undergone a significant shake-up over the past two years, as President John Magufuli’s administration looks to increase revenue collection and improve efficiency. In April 2016 President Magufuli moved to dissolve the TCRA board and suspend its director-general after it failed to implement the Telecommunications Traffic Monitoring System, with the government losing an estimated TSh400bn ($181.9m) in telecoms revenues annually as a result. This could help stave off future tax increases, with the country’s mobile segment already one of the most heavily taxed in the economy, according to a 2015 report by Deloitte. They reported that mobile operators are subject to 10 different taxes, as well as regulatory fees and charges, with operators paying an estimated $540m in taxes annually, comprising 11% of the country’s total tax base.

In addition to a value-added tax on SIM cards, the excise charges on calls, SMS and data were increased on three occasions between 2012 and 2015 – reaching 17% – while the government also introduced a monthly tax of TSh10,000 ($4.55) for all active SIM cards in 2013, although this was later removed. Furthermore, mobile money transfer services are charged a 10% excise tax, with Deloitte reporting that taxes account for approximately 35% of the cost of mobile ownership in Tanzania, which is the second-highest level in Africa and nearly double the global average.

Low Prices

This is especially problematic given that mobile broadband network expansion, ongoing market liberalisation and rising competition in the mobile market have driven mobile tariffs to some of the lowest levels in Africa. It has affected average revenue per user (ARPU), with BMI Research reporting that blended industry ARPU fell from TSh5952 ($2.71) per month in 2013 to TSh5097 ($2.32) in 2014, declining further to TSh4605 ($2.09) and TSh4343 ($1.98) in 2015 and 2016, respectively. The firm forecasts that ARPU will continue to decline, falling to TSh4000 ($1.82) in 2020. Meanwhile, Vodacom reported that ARPU in Tanzania fell from TSh6530 ($2.97) per month in FY 2014/15 to reach TSh5972 ($2.72) per month in FY 2015/16, which it attributed to price competition. New investments in mobile money and data services helped to support a modest recovery in FY 2016/17, and the firm’s monthly ARPU rose to TSh6003 ($2.73).

In a 2013 policy paper, the South Africa-based Research ICT Africa reported that Tanzania’s prepaid mobile voice tariffs are the third lowest in Africa after Kenya and South Africa, while prepaid mobile broadband tariffs were also the third lowest behind Kenya and Ghana. More recently, Research ICT Africa reported in October 2016 that Tanzania’s mobile data costs are the lowest in Africa, averaging $0.89 per GB, compared to $5.26 in South Africa, $5 in Kenya, $2.80 in Egypt, $5.26 in Nigeria and $5.80 in Malawi.

Consumer tariffs are set for further contraction after the TCRA announced it would introduce mobile number portability (MNP) to the sector in February 2017. MNP enables consumers to keep their old phone number without paying a charge if they switch to a new network, with the service going live in March 2017. Although the changes are aimed at improving service quality and limiting consumer costs, MNP adds to an increasingly heavy burden on operator profits and questions remain about the viability of having seven operators in a market of around 40m mobile users.


Tanzania is well positioned to remain at the forefront of regional telecoms development, with the mobile money and mobile broadband segments forecast to continue driving growth into 2018, although margins may remain under pressure from low tariffs, a high fiscal burden and mandated IPOs. Although these challenges could weigh on future revenues, the country’s relatively low levels of mobile broadband penetration combined with demand for cashless banking services and new investment in infrastructure should keep telecoms growing steadily over the medium term.