Tanzania May Reduce Mobile Fees by 69% to Boost Competition

Tanzania may reduce the fees that mobile-phone companies charge each other for calls across networks by as much as 69 percent in March as it seeks to increase competition, the industry regulator said.

The so-called interconnection rate may be cut to 34.92 Tanzanian shillings (2 U.S. cents) a minute from 112 shillings, said Innocent Mungy, spokesman for the Tanzania Communications Regulatory Authority, or TCRA. The regulator also accepted a request by operators to start charging fees in shillings rather than dollars, Mungy said in an interview today from Dar es Salaam, Tanzania’s commercial hub.

“We are doing this to encourage competition in the sector, and to ensure calling is affordable to consumers,” Mungy said. “We held consultations with stakeholders including consumers and telecom operators on the matter yesterday and the board will have to make a decision in a week or so but before the end of this month. The rates however have to go down.”

Tanzania has 46.8 mobile subscribers per 100 people, compared with an average of 61.6 in neighboring Kenya and 100.5 in South Africa, the continent’s largest economy, according to data published on the website of the Geneva-based International Telecommunications Union. Tanzanian subscribers spend an average of 56.7 minutes on domestic calls a month, while Kenyans use 84.4 and South Africans use 137.9, the data shows.

Cost Survey

The planned reduction is based on a cost survey that the regulator commissioned auditing firm PWC Tanzania Ltd. to conduct among telecommunications companies operating in East Africa’s second-biggest economy, Mungy said.

The TCRA has reduced interconnection rates from the equivalent of 7.32 U.S. cents in 2010 to their current level, according to data on its website.

Vodacom Group Ltd.’s Tanzanian unit is the country’s biggest telecom operator with 9.2 million subscribers as of June, according to Managing Director Rene Meza. Its competitors include Bharti Airtel Ltd.’s domestic subsidiary, with 6.4 million customers, and Millicom International Cellular SA’s unit, known as Tigo Tanzania, with five million, according to the regulator.

Meza didn’t immediately respond to an e-mail requesting comment.

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