Viettel Announces US $1 Billion 3G Investment in Tanzania

During a visit from Tanzanian president Jakaya Mrisho Kikwete to its Vietnamese headquarters, multinational operator Viettel committed to investing US $1 billion to build a 3G network in Tanzania. Viettel won a license to operate in Tanzania in early October, and one of the conditions was connecting the country’s expansive rural areas with mobile service. On awarding the license, Tanzanian deputy communication, science and technology minster January Makamba stated, “They will roll out broadband through fibre-optic cable to rural Tanzania.”  In announcing this sizable investment so soon after winning the license, Viettel appears to be preparing to make good on this commitment.

The strategy stands in contrast to the path Viettel pursued when it expanded into Peru, where a significant amount of time elapsed between acquiring the license and rolling out the network infrastructure. Viettel’s urgency is likely driven by the crowding of the Tanzanian market—there are already four sizable players, all of which are owned in part by major international telecom players—Bharti Airtel, Tigo (part of Millicom), Vodacom Tanzania and Zantel (part of Etisalat), as well as three smaller operators. Even given this volume of competition, there are still significant opportunities in Tanzania; only 64 percent of the country’s 49.25 million citizens have mobile service. Given the rapid uptake of mobile service in developing economies, however, it is unlikely that the penetration rate will stay this low for long.

In the future, there will likely come a point where some market consolidation is needed—we have seen numerous examples of the unsustainability of markets with five operators—however, with many Tanzanians still unconnected and significant opportunities existing to upsell others to higher-cost service packages, this type of M&A activity does not appear imminent. While Viettel may be getting a late start compared to its competition, it would be foolish to count it out, since the company has significant experience building and marketing mobile service in emerging economies from its operations in eight other markets across Southeast Asia, Africa and Latin America.

“With telcos in Europe and North America appearing locked in a constant cycle of increasing infrastructure costs and declining ARPU, companies like Viettel and Millicom, which have significant and expanding operations that are exclusively in emerging markets, could be poised to become among the most important international mobile players in the near future. Not only do the countries they operate in have much more room for growth, their success in these rapidly shifting and diverse markets has required operational flexibility and institutional creativity. This cultural difference has enabled these companies to capitalize on new revenue streams—like mobile money—much faster than many of the established telecom heavyweights.”

Jamie Davella,

Research Analyst at Tarifica

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

STC Offers The Highest Value Plans in Saudi Arabia While Mobily and Zain Tie for Second Place

Tarifica has announced the latest Tarifica Scores for postpaid mobile plans in Saudi Arabia.

The Tarifica Score™ is a proprietary algorithm used to evaluate mobile plans based on the value they offer consumers. It incorporates every aspect of each mobile plan (including usage allotments, geographic coverage, data speeds, value added features and promotional elements) and weighs them against each plan’s total costs to determine its consumer value. Scores range from 0 to 100.

“STC’s Postpaid 400 plans have the highest overall score in both the ‘without phone’ and ‘with phone’ categories,” said Jamie Davella, Tarifica’s Saudi Arabia Analyst. “In the without phone category, STC won because of its faster download speeds, while its with phone plans came out on top in that category because of their lower device charges. Interestingly, Mobily’s best overall plans (Wajid Extra) have more voice and text allowances than STC’s top plan and somewhat lower monthly fees but these attributes do not outweigh Mobily’s slower network speed and higher phone costs,” she continued.

Mobily and Zain are virtually tied for second place in the overall best plans category, scoring 94 and 93, respectively, among plans without phones, and 83 and 82, respectively, among those that include one.

Each operator wins its share of top honors for plans segmented by monthly charge. In fact, Mobily has the best plans in four of these subcategories while Zain wins in three and STC in two, indicating that the market is very competitive. Zain also wins the competition for offering the highest data allotment with its 1 Terabyte Package XTRA plans. Since the Tarifica Score uniformly cuts off all data allotments greater than 10 gigabytes in order to conform to most common usage patterns, plans with this extremely high volume of data did not win in either the overall or price-specific categories.

“In today’s mobile marketplace, consumers are flooded with hundreds of plan variations and constantly shifting promotions and deals—the majority of which come with different costs and services and access networks of differing strengths. When making a decision that will likely impact them for up to two years, consumers can use Tarifica Scores to cut through the clutter and identify those plans in every market segment that offer the best value for the money,” stated Tarifica Program Manager, Will Watts.

Ken Dolsky, Senior Program Director at Tarifica also commented on the market intelligence value to operators. “We see great interest in the Tarifica Score among mobile operators. Users gain access to our proprietary model which enables operators to design plans that score high in consumer-friendliness and value. They are also able to quickly see, in quantitative terms, the impact that competitive changes have on the market. In the case of Saudi Arabia, STC’s best plan scored six points better than Mobily’s best plan among those without phones but when its lower priced phone advantage was included it increased the gap between them to 17 points among plans that came with a device.”

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