May 11, 2018 / 10:30 AM / a year ago

CORRECTED-Vodacom Tanzania eyes more spectrum after solid annual earnings growth

(Corrects May 11 story to refer to service revenue not pretax earnings in paragraph 1, amends details on voice revenue and spectrum in paragraphs 4, 8)

By Fumbuka Ng’wanakilala

DAR ES SALAAM, May 11 (Reuters) - Vodacom Tanzania reported a 6 percent rise in full-year service revenue on Friday, helped by the launch of cheaper smartphones, and said it plans to buy additional spectrum to boost internet services.

Vodacom Tanzania, majority owned by South Africa’s Vodacom Group, said in a statement that EBITDA rose to 266.4 billion shillings ($117 million) in the year through March, as new, cheaper smartphones helped drive a 35 percent jump in revenue from mobile data to 141.6 billion shillings.

Service revenue increased 6 percent from a year earlier to 966.3 billion shillings, while income from mobile money payment services rose 17 percent to 291.2 billion shillings.

Voice revenue fell 6 percent to 392.3 billion shillings after mobile incoming revenue dropped 14.2 percent following a decision by Tanzania’s telecoms regulator in January to cut the mobile termination rate, a fee operators pay each other for calls made from one network to another.

“Vodacom has filed an appeal with the Fair Competition Commission against the regulator’s decision to impose a 42.1 percent reduction in the mobile termination rate,” Vodacom Tanzania’s Managing Director Ian Ferrao told investors on a conference call.

“We are seeing some pressure on voice revenue ... data pricing also needs to be repaired, but this will depend on how our competitors act.”

Vodacom controls has around a 32 percent market share of the country’s 40 million mobile subscribers. Other major players include Tigo Tanzania, a subsidiary of Sweden’s Millicom , and a local unit of India’s Bharti Airtel .

Ferrao said Vodacom plans to take part in Tanzania’s first spectrum auction expected to be held next month, aiming to acquire spectrum in the 700 MHz band that would enable the mobile operator to roll out 4G services to more towns and cities in East Africa’s third-biggest economy.

“Should we be successful in securing 700 MHz spectrum in this year’s auction, we expect to provide a superior 4G data user experience to a greater number of regions across the country,” he said.

Vodacom said active data customers rose by 882,000 over the past year to 7.3 million, driven by digital social media partnerships and low-cost smartphone campaigns.

Going forward, Ferrao said he expects Vodacom Tanzania’s revenue to continue to be underpinned by growth in mobile money and data services.

Vodacom’s $213 million initial public offering last August was Tanzania’s largest ever IPO, and attracted more than 40,000 local investors, most of whom were first-time participants in the country’s stock market.

Foreigners, initially banned from participating, bought 40 per cent of the shares.

The IPO was part of a government directive that mobile phone companies must float at least a 25 percent stake on the Dar es Salaam Stock Exchange (DSE).

Vodacom is the only telecom company so far in Tanzania to list on the DSE.

$1 = 2,277.0000 Tanzanian shillings Reporting by Fumbuka Ng'wanakilala; Editing by George Obulutsa and Susan Fenton

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