Tanzania: Assessment - Time Telcos Competition Got Checked

Dar es Salaam — As competition gets stiffer than ever before in the mobile telecommunications sector, the recently-unveiled assessment on the market has proposed numbers of regulatory measures to be imposed on mobile network operators to ensure fairness.

The measures target telcos currently considered as operators with significant market power (SMP).

This is according to the new report on competition titled Tanzania Telecommunications and Broadcasting Market 2019, published by the Tanzania Communications Regulatory Authority (TCRA), covering the period from 2013 to 2017.

An operator is considered to have attained the SMP status if it holds over 35 percent of the market share in the relevant market, as defined under section 62 (2) of the Electronic and Postal Communications Act, 2010.

The assessment shows that, although competition has intensified to cut-throat levels even as tariffs are going down, the market is still concentrated in the hands of three major telecoms: Vodacom, Tigo and Airtel.

The objective of the assessment was to identify and define relevant markets, determine state of competition and dominance and propose regulatory remedies for addressing anti-competitive behaviours.

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However, the assessment has noted that growing competition seems to raise challenges for communications policy makers and regulators, while companies tend to build monopoly.

It has been revealed in the assessment that there are some points when large telcos may exercise their market powers to the disadvantage of consumer welfare and overall industry performance; giving rise to an inefficient allocation of resources.

One of these challenges, according to the assessment, is how to determine an optimal mix of market and regulatory involvement in determination of prices, services and investment decisions.

TCRA says the assessment of competition and dominance was conducted in accordance with the criteria provided under section 14 (a)-(f) of the Electronic and Postal Communications (Competition) Regulations, 2018.

Tanzania has about 43 million mobile telecom subscriptions, according to a TCRA report for the second quarter of this year ended in June, with eight telecom companies, offering similar services competitively.

However, with the growing number of people using mobile telecoms services such as mobile money, voice and data, telecoms might use the market-driven scenario to exploit consumers through price fixing or sabotage other players through predatory tactics.

These may also include promotional and special offers for both voice and data usage, which do not significantly give the relief to consumers.

The measures are also part of consumer protection as companies tend to impose their tariffs without public hearing or regulatory approval.

According to the report, only Tigo-Tanzania and Vodacom-Tanzania hold over 35 percent of market share in voice call and mobile money markets.

However, the measures will not cover the growing data market, as there is no operator which qualifies to be categorized as having SMP.

The proposed measures are aimed at enabling their tariffs to remain cost based and have to be approved by the regulators.

Currently, the mobile telecom services are market driven and tariffs for services are set without being scrutinized by the regulator.

The report shows that in the voice call market, Vodacom has 41 percent of the market share while Tigo Tanzania holds 36 percent.

In this area, the regulator is considering introducing rules to monitor special offers and promotion.

In the mobile money market, the shares of Vodacom and Tigo, according to the report stood at 45 percent and 38 percent respectively.

Vodacom is leading with a market share of 45 percent in mobile money transactions, followed by Tigo with 38 percent and Airtel with 10 per cent.

The remaining mobile money operators account for seven per cent. The mobile money market continues to be interlinked with banks or financial institutions, but the tariffs for transaction is market driven and are set on the wish of an operator. According to the assessment, the Bank of Tanzania (BoT), as the regulator of financial services is therefore advised to review withdrawal charges from mobile money agents and sending/withdrawal charges to/from banks.

For data, where there is no SMP, the assessment has proposed for the introduction of rules to monitor offers and promotions.

With more than 23 million Tanzanias currently using mobile data markets, telcos are considering it as the growing revenue channel as it accounts for the largest incomes.

"All charges for SMP operators should be cost based and be approved by the regulator," says the assessment released this month.

Data market includes OTT chats, email, browsing and surfing.

The assessment shows that Tigo is leading - with a market share of 35 percent - followed by Vodacom with 24 percent, Airtel (16 percent), Halotel (13 percent), and TTCL (12 percent).

For short message services (SMS) no remedy is proposed because there is no threat of misconduct by SMP operator due to a shift from ordinary SMS to social media chat services. Tigo is the only firm with SMP on SMS as it accounts for 51 percent. No data for other companies were published by the assessment.

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