M-Pesa pushes up Vodacom’s revenues

Monday May 21 2018

A client using a mobile money service M-Pesa.  PHOTO FILE | NATION

A client using a mobile money service M-Pesa. PHOTO FILE | NATION 

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Revenues for Vodacom Tanzania Plc grew by 16.7 per cent in the first quarter of 2018, buoyed by revenue from M-Pesa.

Vodacom, the only telco listed in Tanzania, registered Tsh291.2 billion ($127.1 million) in revenues, thanks to a successful marketing campaign dubbed “Pesa ni M-Pesa.”

“We believe that our M-Pesa customer base will continue to expand as we focus on building greater activity through our ‘Lipa kwa M-Pesa’ merchant platform and establishing new partnerships which enhance the mobile money ecosystem,” the firm said in its Q1 report.

The telco said during the period under review, it gained more active M-Pesa customers, pushing its mobile money subscribers to 8.2 million.

Interoperability has seen increased competition in the mobile money market, with Vodacom now facing pricing challenges as other service providers charge less.

Transaction charges

Vodacom charges between Tsh1,000 and Tsh5,000 ($0.43 to $2.2) for transactions ranging between Tsh100,000 ($43.6) and Tsh1 million ($436), while Millicom subsidiary Tigo charges between Tsh900 ($0.3) and Tsh5000 ($2.2) for money transferred to other networks amounting to between Tsh100,000 ($43.6) and Tsh3 million ($1,310).

Airtel charges only Tsh1,000 ($0.4) for any transaction from Tsh200,000 ($87.2) to Tsh3,000,000($1,310). Airtel Tanzania does not charge for transfers to Airtel Money accounts between Tsh200,000 ($87.2) and Tsh3,000,000 ($1,310).

Vodacom accounts for 37 per cent of mobile money subscribers followed by Millicom Tigo and Bharti Airtel at at 31 per cent 27 per cent respectively.

According to the firm’s preliminary results as at March 2018, Vodacom registered an increase of 5.9 per cent on service revenue to Tsh966.5 billion, ($417.4 million).

“As expected, the 42.1 per cent reduction in the mobile termination rate and measures to improve customer registration compliance weighed on revenue growth in the final quarter,” said the out-going managing director Ian Ferrao.

Mobile termination tariff

Tanzania Communications Regulatory Authority (TCRA) in January reduced the mobile termination tariff, a fee that operators pay for calls made from one network to another by 42.1 per cent.

“Persistently operators have not been able to come into agreeable agreements due to conflicting commercial interests, forcing the regulator to intervene and determine rates taking into account relevant sector laws in place,” said TCRA director general, Eng James Kilaba.

However, voice revenue fell by 5.8 per cent to Tsh392.3 billion (171.3 million) despite the mobile company holding around 12.9 million voice subscribers.

“We have filed an appeal against the TCRA’s new mobile termination rates with the Fair Competition Commission primarily on the grounds that the ‘glide path’ sets MTRs below the costs incurred by operators,” stated Vodacom.

On the other hand, EBITDA rose to 266.4 billion shillings ($116.3 million) since the start of the year to March, amplified by a 34.7 per cent jump in revenue from mobile data to 141.6 billion shillings ($61.80 million).

Vodacom is the only telecommunications company to list on the Dar es Salaam Stock Exchange.

Airtel is currently negotiating with the government over the ownership of its Tanzanian business.