In a significant move poised to reshape Tanzania’s telecommunications landscape, Vodacom Tanzania Plc, the nation’s leading mobile operator, has successfully completed its strategic takeover of Smile Communications Tanzania Ltd. This pivotal acquisition, valued at Tsh73.22 billion (approximately $28.18 million USD), marks a decisive step for Vodacom in its ambitious drive to accelerate the rollout of its advanced 4G and 5G network coverage across the Tanzanian market. The deal, which solidified earlier this year, is a clear indicator of Vodacom’s commitment to enhancing connectivity and driving digital transformation in one of Africa’s fastest-growing economies.

The acquisition’s financial breakdown reveals a meticulous strategic allocation: Tsh60.72 billion ($23.37 million) was paid directly to Smile Holdings shareholders, while an additional Tsh12.5 billion ($4.81 million) covered the reassignment costs for the crucial spectrum acquired through the transaction. This investment is not merely about expanding Vodacom’s footprint; it’s fundamentally about securing vital spectrum resources that are the lifeblood of modern mobile communication.

The Strategic Imperative

Vodacom’s rationale for acquiring Smile Communications Tanzania Ltd was unequivocally centered on gaining access to essential spectrum. Prior to the acquisition, Smile Communications Tanzania Ltd, a subsidiary of the South African telecommunications conglomerate Smile Telecoms Holdings, had ceased its operations, terminated contracts with partners, and unfortunately, retrenched its employees. This context suggests that while Smile’s direct operational presence had diminished, its underlying asset – the spectrum – remained highly valuable.

“In March 2024, we acquired a small telecom operator – Smile Communications Tanzania Limited (Smile), which gave us access to the essential spectrum resources for enhancing our network infrastructure and providing superior customer experience,” Vodacom stated in its latest annual report. This statement highlights the core strategic driver: the spectrum. The agreement specifically granted Vodacom access to 20MHz of 800MHz and 20MHz of 2600MHz frequency bands previously held by Smile.

These particular spectrum bands are incredibly valuable for modern mobile networks, especially for the deployment and optimization of 4G and 5G technologies. The 800MHz band, often referred to as “low-band” spectrum, is renowned for its excellent propagation characteristics. This means signals in this frequency can travel longer distances and penetrate obstacles like buildings more effectively. This makes the 800MHz band ideal for providing wide-area coverage, particularly in rural and underserved areas, and for improving indoor coverage in urban environments where signal penetration can be challenging.

Conversely, the 2600MHz band, a “high-band” spectrum, offers substantial capacity. While its signals don’t travel as far or penetrate as well as lower frequencies, it can carry a much larger volume of data at higher speeds. This makes the 2600MHz band perfect for dense urban areas, hotspots, and locations with high user concentrations, where fast data speeds and significant bandwidth are critical. By acquiring both these complementary bands, Vodacom has significantly strengthened its ability to offer a balanced network that provides both extensive coverage and high-speed, high-capacity services, catering to diverse customer needs across Tanzania.

Since concluding the acquisition, Vodacom has wasted no time in leveraging these newly acquired assets. The company has successfully activated the spectrum and connected more than 1,000 sites across the country, rapidly integrating Smile’s former assets into its robust network infrastructure. “In addition to providing greater network efficiency and reliability, the acquisition ensured we are well-positioned to meet Tanzania’s growing demand for mobile data services while enhancing our existing customers’ data experience,” the company affirmed.

Smile’s Journey: From Pioneer to Strategic Asset

Smile Communications Tanzania Ltd, though no longer an active operator, played a notable role in Tanzania’s telecommunications history. Registered in July 2009, it began commercial operations in May 2013, making headlines as the first company to launch commercial 4G LTE services in Tanzania. Its initial focus was on Dar es Salaam and Arusha, later expanding its network to other key cities like Dodoma, Mbeya, Morogoro, Moshi, and Mwanza.

Smile Telecoms Holdings, its South African parent, had ambitious plans across Africa, raising a significant $365 million in debt and equity financing to extend broadband services. However, despite its pioneering spirit in 4G, Smile Tanzania faced considerable operational and financial challenges in a highly competitive market dominated by larger players. According to the Tanzania Communications Regulatory Authority (TCRA), Smile Tanzania had a relatively small subscriber base of just 13,840 by June 2023. This limited customer base, coupled with the high costs associated with network maintenance and expansion, likely contributed to its decision to cease operations, making its valuable spectrum holdings available for acquisition. For Vodacom, the acquisition represented a unique opportunity to gain immediate access to desirable frequencies without the complexities and uncertainties of a public auction for those specific bands.

The Regulatory Environment: TCRA’s Role in Shaping Connectivity

The Tanzanian telecommunications sector is overseen by the Tanzania Communications Regulatory Authority (TCRA). TCRA plays a crucial role in managing the country’s scarce radio frequency spectrum, ensuring fair competition, and promoting the expansion of communication services. The authority regularly conducts spectrum auctions to allocate these vital resources to operators, aiming to advance the nation’s digital economy agenda.

Just recently, on February 3, 2025, the TCRA issued a draft information memorandum outlining its plans to license new spectrum in the 3600-3800MHz frequency band through an upcoming spectrum auction. This band is particularly relevant for future 5G deployments, offering even greater capacity potential. Reserve prices for this upcoming auction were proposed at Tsh30 billion ($12 million) per 1x50MHz block, indicating the high value placed on these frequencies. The auction, scheduled for July 2025, aims to accelerate Tanzania’s digital economy by enhancing mobile and fixed broadband infrastructure, extending services to a wider population, and fostering innovation in ICT services, as reported by The Guardian.

This upcoming auction builds on previous successful initiatives by TCRA. For instance, in October 2022, TCRA successfully auctioned 11 blocks of spectrum across the 700 MHz, 2300 MHz, 2600 MHz, and 3500 MHz bands, raising a substantial $187 million. These regulatory efforts are vital for ensuring that operators have the necessary resources to invest in and expand their networks, ultimately benefiting consumers with improved services and wider coverage.

Vodacom Tanzania: A Pillar of the Tanzanian Telecom Market

Vodacom Tanzania Plc is a dominant force in the country’s telecommunications sector. The company is 75 percent controlled by South Africa’s Vodacom Group Ltd, whose ultimate parent is the British telecommunications giant Vodafone Group Plc. This strong lineage provides Vodacom Tanzania with access to global expertise, technological advancements, and significant investment capabilities.

Vodacom Tanzania’s latest financial results underscore its robust performance and strategic success. In the financial year ended March 31, 2025, the company recorded an impressive 69.4 percent growth in net profit, reaching Tsh90.51 billion (approximately $34.84 million USD), up from Tsh53.42 billion ($20.56 million) in the previous year. This substantial profit growth enabled the board to propose a final dividend equivalent to 50 percent of the profit after tax, in line with the company’s dividend policy, signaling strong returns for its shareholders.

As of March 2025, Vodacom maintains its leading position in the Tanzanian mobile market with a 31.7% market share. The competitive landscape in Tanzania is vibrant, with other major players including Yas (formerly Tigo, holding 28.7%), Airtel (22.9%), Halotel (14.8%), and the state-owned Tanzania Telecommunications Corporation (TTCL) with 1.9%. The overall mobile subscription base in Tanzania has seen remarkable growth, reaching 90.4 million by March 2025, a significant 76.5% increase from 51.2 million in 2020. This rapid expansion highlights the immense potential and ongoing demand for mobile connectivity in the country.

Vodacom’s success is not just about subscriber numbers; it’s also about its strategic vision. “Increased adoption of smartphones is critical in supporting the transformation to the digital economy. We will continue working with our partners to facilitate access to affordable smartphones. And, we will continue investing in our network, in particular the data network, to expand coverage and enhance quality of services to address customer experience issues,” the company stated. This commitment reflects Vodacom’s understanding that affordable devices and robust data networks are symbiotic for driving digital inclusion.

The Impact of Declining Mobile Termination Rates (MTRs)

Another critical regulatory development shaping the Tanzanian telecom market is the ongoing reduction of Mobile Termination Rates (MTRs). MTRs are the fees that one telecommunications operator charges another for terminating a call on its network. These rates have a direct impact on the cost of calls, particularly “off-net” calls (calls made from one network to another).

In July 2023, the TCRA issued its Interconnection Rates Determination No. 6/2023, which set the MTRs applicable for a five-year period, extending to December 2027. In accordance with this determination, January 2025 saw the MTR drop by 4.5 percent to Tsh1.68 per minute, a rate that will remain in effect until December 31, 2025. Looking ahead, the rate is expected to drop further by 4.8 percent to Tsh1.60 per minute starting January 1, 2026, and will be applicable until December 31, 2026.

The consistent reduction in MTRs has several significant implications for both consumers and telecommunication operators:

• For Consumers: Lower MTRs generally translate to more affordable call rates, especially for calls made across different networks. This increases accessibility to communication services for a broader segment of the population, encouraging higher usage of mobile services. It reduces the financial burden on consumers and fosters greater interconnectedness.
• For Operators: While larger operators might see a reduction in revenue from termination fees, lower MTRs promote a more competitive environment. They reduce the “cost to terminate” for smaller operators, making it easier for them to compete on pricing for off-net calls. This can lead to more innovative pricing plans and bundles, ultimately benefiting consumers through increased choice and value. Economists often refer to a “waterbed effect,” where a reduction in MTRs might lead to adjustments in other pricing areas (like data or subscription fees), but empirical studies generally suggest that lower MTRs lead to an overall reduction in average retail prices and increased consumption of mobile services, as discussed in various analyses on MTR impacts.

This regulatory foresight by TCRA aims to ensure that the benefits of a competitive telecom market are passed on to the end-users, fostering greater affordability and driving the overall adoption of mobile communication.

Tanzania’s Digital Revolution: A National Priority

Tanzania is in the midst of a profound digital revolution, with robust investments in digital infrastructure and a burgeoning public appetite for online services. The number of internet users in Tanzania has soared, reaching an unprecedented 54.1 million by the end of the fourth quarter of the 2024/2025 financial year. This marks a dramatic increase from 29 million users in 2020, representing a near doubling of internet penetration in just five years.

This rapid digital transformation is fueled by several factors: the widespread availability of 4G and increasingly 5G networks, the expansion of fiber-optic infrastructure, and concerted efforts by mobile network operators and the government to promote affordable data access and smartphone adoption. The government, through the TCRA and the Ministry of Information, Communication and Information Technology, has been instrumental in fostering a conducive environment for this digital expansion through initiatives like digital clubs and “Girls in ICT” forums, aimed at equipping citizens with essential digital skills.

The ripple effects of this increased internet connectivity are profound, touching every facet of Tanzania’s economy and society. Digital platforms have revolutionized how Tanzanians conduct business, enabling the widespread use of mobile money services, the growth of e-commerce platforms, and the rise of digital marketing. These advancements have empowered thousands of youth and women entrepreneurs to sell products, access wider markets, and actively participate in the digital economy. Beyond commerce, internet access is transforming sectors such as education (e-learning), agriculture (access to market information and modern farming techniques), finance (mobile banking and digital payments), healthcare (telemedicine and digital health records), and governance (e-government services).

Vodacom Tanzania’s continued investment in its network, particularly in expanding data coverage and enhancing quality, directly aligns with this national digital agenda. By facilitating access to affordable smartphones and building a robust network, Vodacom is playing a critical role in bridging the digital divide and ensuring that more Tanzanians, regardless of their location, can harness the benefits of connectivity. The company’s “Inclusion for All” strategy, aligned with the UN Sustainable Development Goals, specifically targets reducing inequality by providing inclusive technology and accessible services, including dedicated support for persons with disabilities. This includes equipping retail shops with wheelchair ramps, priority desks, and offering sign language service advisors in-store and via video support at call centers.

Looking Ahead: Vodacom’s Vision for a Connected Tanzania

The acquisition of Smile Communications Tanzania Ltd is more than just a transaction; it is a strategic maneuver that significantly strengthens Vodacom Tanzania’s position in a highly competitive and rapidly evolving market. With enhanced spectrum resources, Vodacom is better equipped to meet the burgeoning demand for mobile data services, deliver superior customer experiences, and accelerate the deployment of cutting-edge 5G technology.

The company’s consistent financial growth, coupled with its proactive investment strategy and alignment with national digital transformation goals, paints a promising picture for its future in Tanzania. As the country continues its journey towards a fully-fledged digital economy, robust telecommunications infrastructure will remain the backbone of progress. Vodacom’s commitment to expanding coverage, improving service quality, and fostering digital inclusion positions it as a key enabler of this national aspiration.

The ongoing regulatory support from TCRA, particularly through transparent spectrum allocation and MTR reductions, creates a conducive environment for further investment and innovation. This collaborative ecosystem, involving operators, regulators, and government initiatives, is crucial for ensuring that Tanzania continues to unlock the full potential of its digital future, connecting more people, empowering more businesses, and contributing to overall socio-economic development. Vodacom Tanzania, with its widened smile and strengthened network, is clearly at the forefront of this exciting era of connectivity.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

30th July, 2025