20 January 2013

Tanzania: Nation to Cut Interconnection Charges

DAR ES SALAAM, Tanzanians will soon enjoy calling from one mobile phone to another at a lower rate following a move by the Tanzania Communications Regulatory Authority (TCRA) to start seeking views on the reviewed interconnection rates.

TCRA's Director General, Prof John Nkoma told East African Business Week in Dar es Salaam that his authority is proposing the reduction of the interconnection by 60% come March 1st, 2013.

According to Prof Nkoma, the proposed reduction was designed after conducting a cost based interconnection study recently.

Nkoma said TCRA proposed Tsh34.92 (about$0.0218) for 2013, Tsh32.40 (about$0.0203) for 2014,Tsh30.58 (about$0.019) for 2015,Tsh 58.27 (about$0.036) for 2016 and Tsh26.96 (about$0.017) for 2017.

"As you can see from the figures we announced, the interconnection rates are really going down, Prof Nkoma said, adding that we are planning to lower the charges as low as $0.017 by 2017."

The voice call termination rate is at $0.0716 according to 2012 rates but it is expected to reduce to $0.0218 starting March 2013, the authority said last week.

Interconnection charges, the rate mobile phone operators charge each other for calls made across networks, fell to $7.16 in January this year from $7.83 in 2008, said Minister for Science and Technology, Prof Makame Mbarawa.

However, the decrease in interconnectivity charges, which should have trickled down to lower user tariffs, had been offset by a volatile local currency.

Mobile phone penetration in Tanzania stood at 47% by 2011, the regulator said, adding that the number of internet users rose to 6 million by May this 2012 from 5.3 million at the end of 2011.

Tanzania's mobile phone subscribers rose 22% to 25.6 million last year, helped by lower tariffs.

Communications is the fastest-growing sector in east Africa's second biggest economy, with seven players in the local mobile telecoms industry fighting for market share, forcing tariffs lower.

However, according to Prof Mbarawa, phone tariffs were halved in Tanzania over the past 10 years due to increased competition.

"There are now eight licensed mobile phone subscribers, with seven in service. Besides increasing consumer choice, the increase in the number of service providers has led to a 50% fall in mobile tariffs," he said.

Vodacom Tanzania, part of South Africa's Vodacom, is the market leader with a 43% market share followed by Bharti Airtel (28%), Millicom's subsidiary Tigo Tanzania (22%) and Zantel (6%).

Other smaller players are state-run telecoms firm TTCL, Sasatel and Benson, which have tiny market share.

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