Vodacom Tanzania’s smile widens after telco takeover

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Vodacom Tanzania earlier this year completed the takeover of Smile Communications Tanzania Ltd with a payment of Tsh73.22 billion ($28.18 million) as the telco moved to expand the rollout of its 4G and 5G coverage in the Tanzanian market.

Latest disclosures show that the amount comprised Tsh60.72 billion ($23.37 million) as payment to Smile Holdings shareholders and Tsh12. 5 billion ($4.81 million) in a reassignment cost for the spectrum acquired through the acquisition of the South African telecom operator.

In its latest annual report, Vodacom says prior to the acquisition, Smile Communications Ltd had ceased operations, terminated contracts with partners and retrenched employee.“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,” the company says.“This agreement granted us access to spectrum resources previously held by Smile, including 20MHz of 800MHz and 20MHz of 2 600MHz. This additional spectrum, suitable for a broader coverage and high capacity for faster speeds, has enabled us to expand our 4G footprint and accelerate the rollout of 5G technology.”The company says that since concluding the acquisition, it has successfully activated the spectrum and connected more than 1,000 sites across the country.“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 says.

Spectrum auctionSmile Communications Tanzania Ltd is a subsidiary of Smile Telecoms Holdings, a South African telecommunications conglomerate with operations in Tanzania, Uganda, Nigeria, and South Africa.

Smile began its operations in Dar es Salaam and Arusha but expanded its network after the company raised $365 million in debt and equity financing to extend broadband services

Spectrum is the range of electromagnetic frequencies used for wireless communication. It is a portion of the broader electromagnetic spectrum that encompasses everything from radio waves to gamma rays.

Specifically, the radio frequency spectrum, which is used for wireless technologies like mobile phones, Wi-Fi, and broadcasting, is a key part of this range.

On February 3, the TCRA issued a draft information memorandum on its plan to license new spectrum in 3600-3800MHz frequency band through a spectrum auction.

Reserve prices were proposed at Tsh30 billion ($ 12 million) per 1x50MHz block.

Vodacom Tanzania is 75 percent controlled by South Africa’s Vodacom Group Ltd, whose ultimate parent is the British Vodafone Group Plc.

Vodacom Tanzania recorded a 69.4 percent growth in net profit to Tsh90.51 billion ($34.84 million) in the financial year ended March 31, 2025, from Tsh53.42 billion ($20.56 million) last year, enabling the board to propose a final dividend equivalent to 50 percent of the profit after tax, in accordance with the company’s dividend policy.“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 says.

In July 2023, the TCRA issued the Interconnection Rates Determination No. 6/2023, which set the mobile calls termination rates (MTR) applicable for five years to December 2027.

Accordingly, in January 2025, the MTR dropped by 4.5 percent to Tsh1.68 per minute which will be applicable until December 31, 2025.

Starting January 1, 2026, the rate is expected to drop further by 4.8 percent to Tsh1.60 per minute, which will be used up to December 31, 2026.