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MTN, Vodacom pump money into Africa

The two local operators invest heavily in their Nigerian and Tanzanian operations, respectively.

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 23 Aug 2013
SA's two leading mobile operators are focusing on upgrading their African networks.
SA's two leading mobile operators are focusing on upgrading their African networks.

SA's two top mobile operators are investing heavily in their African operations, with MTN touting its Nigerian spend, while Vodacom's Tanzanian unit is about to see a big boost amid a precarious tax situation.

In line with MTN Nigeria's plans to spend $3 billion (about R30 billion as per the current exchange rate) on its business plan to 2015, the operator has received a $300 million syndicated medium-term facility from Rand Merchant Bank (RMB). The facility forms part of the larger loan involving 17 Nigerian and eight multinational banks.

Nigeria is the MTN's largest operation in terms of subscriber numbers, holding about 51.3 million subscribers out of its total base of 195 million (as at the end of March). MTN Nigeria is also the country's leading cellphone operator, with about 48% market share, but has come under fire from the local authority for not meeting quality-of-service standards.

In an advertising splash in today's Business Day newspaper, RMB says it has committed $200 million across both US dollar and naira tranches, which will enable MTN Nigeria to further invest in network infrastructure to "improve telecommunications, data quality and capacity across Nigeria".

Tanzanian tally

Meanwhile, SA's largest cellphone operator, Vodacom's, Tanzanian unit plans to invest 200 billion shillings ($124 million, or about R1.3 billion) to expand its network this year, but says rising taxes in the East African country could stifle the sector.

Reuters cites Rene Meza, MD of Vodacom Tanzania - the country's largest mobile operator - as saying he expects growth in subscriber numbers this year, despite significant competition.

Like many other African economies, telecoms is Tanzania's fastest growing sector, but according to Reuters, mobile operators say the government's introduction of a new tax of 1 000 shillings per month on every SIM card and an excise duty of 0.15% on money transfers, could hurt investment.

"They argue the SIM card tax will delay expansion of mobile phone use among the poor majority in rural areas - around 23 million Tanzanians do not use mobile services."

The SIM tax was introduced just under two months ago, but has been put on hold following an outcry from the public.

According to the Mobile Operators' Association of Tanzania, the 45 million-strong nation has a mobile penetration rate of 48% (about 22 million subscribers). As at June, Vodacom Tanzania had about 9.7 million subscribers.

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