Tanzania Telecom Talking to Banks on $300 Million Expansion

DAR Es Salam (Capital Markets in Africa) – Tanzania Telecommunications Co., the state-owned phone company, said it’s in talks with banks to raise funds for a $300 million expansion program to take on larger rivals including Vodacom Tanzania Ltd.

An unspecified amount of funding has already been secured from the state-owned TIB Development Bank for the five-year strategy, acting Chief Executive Officer Waziri Kindamba said in an interview Tuesday in the commercial capital, Dar es Salaam. The company, which is considering listing on the domestic stock exchange, may also source financing from the government.

“We have the government’s full support to reclaim TTCL’s position in the market,” Kindamba said. “The government may decide to put its own funds towards revamping TTCL.”

Tanzanian President John Magufuli signaled his intent to revive struggling state-owned companies last year when the government invested almost $500 million buying aircraft for ailing national carrier Air Tanzania Corp. The government in September acquired full ownership of TTCL when it bought Bharti Airtel Ltd.’s 35 percent stake. In 2015, the government said it would invest $120 million in the company to build a high-speed 4G network.

The state backing will enable the company to rediscover its “lost glory,” Kindamba said.

Buoyed by its monopoly status, the company was once the dominant telecommunications operator in the East African country. Since the industry was deregulated in the 1990s, the company has lost market share to rivals including Vodacom Tanzania and Halotel, a unit of Hanoi, Vietnam-based Viettel Group.

Market Share
TTCL has about 300,000 mobile-phone subscribers, less than 1 percent of the Tanzanian market, which has almost 40 million mobile-phone users, according to data from the Tanzania Communications Regulatory Authority. Halotel, which entered Tanzania in 2015 with a $1 billion investment, has 2.7 million users, while Vodacom, a unit of Newbury, England-based Vodafone Plc, has 12 million.

Vodacom Tanzania is considering a reorganization this quarter that may result in job cuts at the company, according to a notice to employees seen by Bloomberg and confirmed by two people familiar with the plan.

Kindamba said TTCL would focus on growing its share of the data market and also plans to compete in the voice space.

“The $300 million will give us significant coverage nationwide to catch the other competitors,” he said.