Tanzania’s mobile operators have struggled to comply with wave of new regulatory oversight that has seen a rise in fines for violating regulations and scrutiny over service quality in Tanzania. Despite having previously received fines, six of the country’s seven mobile operators still failed to comply with SIM registration regulations and have been issued a new series of fines on 14 July.
- The operators - Vodacom Tanzania, Airtel Tanzania, Tigo Tanzania, Smart, Halotel and Zantel – were all ordered to collectively pay approximately US$4.8 million by 14 October 2017.
- The first fine of approximately US$2.3 million was issued due to non-compliance and malpractice associated with SIM registration regulations, with a further US$1.2 million issued for repeating the offence.
- The final fines, totalling approximately US$1.3 million, were issued for ‘endangering public safety’ through the operators’ failure to register SIM cards correctly or cut off inactive and unregistered SIM cards.
Tanzania’s seven mobile network operators currently serve 38.9 million subscribers, regulated by Tanzania’s Communications Regulatory Association (TCRA).
The TCRA first introduced the more stringent SIM registration regulations in 2013 amending an initial proposition adopted in 2010, with guidelines aimed at deterring terrorist/criminal activity using mobile networks. The 2013 identification requirements were introduced to help local authorities identify and trace criminal activity and monitor terrorist communication over mobile networks.
The 2013 SIM registration guidelines require that operators and representatives:
- Check and verify at least two forms of physical identification from each new or existing subscriber.
- Take a photograph of the subscriber.
- Input a unique identification number into a central database, which will then link the identity to the subscriber’s account.
However, the TCRA has struggled to gain full compliance from operators with the new registration guidelines, which have affected accessibility to mobile services. In many cases, potential subscribers from lower-class backgrounds are undocumented as their lifestyles do not require formal documentation like National ID cards, driving licences or passports. The SIM registration guidelines thus negatively affect uptake of mobile services by a large portion of the population, indicating a conflict between the regulatory provisions and the reality of SIM registration experienced by the operators.
On 14 July, the TCRA released an official statement outlining the three types of fines issued to each of the six operators – for malpractice in SIM registration, for repeating the offence stating that operators continue to sell pre-registered SIM cards, and additional fines for ‘endengering public security’ .
The fines for malpractice were listed as follows:
- Tigo Tanzania (Millicom Tanzania) - US$582,976
- Airtel Tanzania (Bharti Airtel) - US$484,676
- Vodacom Tanzania (Vodacom Group) - US$422,155
- Zantel (Millicom Tanzania) - US$46,906
- Smart (Benson Informatics) - US$33,500
- Halotel (Viettel Group) - US$734,862
The fines issued for repeating the offense:
- Tigo Tanzania (Millicom Tanzania) - US$291,473
- Airtel Tanzania (Bharti Airtel) - US$242,335
- Vodacom Tanzania (Vodacom Group) - US$211,059
- Zantel (Millicom Tanzania) - US$23,451
- Halotel (Viettel Group - US$367,400
- Smart (Benson Informatics) - US$ 16,751
The final fine, given for ‘endangering public security’ was issued to all of the operators at US$223,416, each.
Tanzania Telecommunications Company Limited (TTCL), the state-owned operator, was not fined for any of the aforementioned violations.
Tanzania follows a general trend of increased regulatory policies affecting mobile operators’ strategies across the region
The latest SIM-regulation related fines are part of a series of fines issued by the TRCA in relation to non-compliance, malpractice and Quality of Service. In April 2017, the abovementioned six operators were collectively fined US$310,000, following an audit that found all operators had fallen short of delivering on provisions included in their Quality of Service agreements.
As the Tanzania telecommunications market experiences growth, the TCRA’s influence on market strategies, competitive practices, and operations has increased. Over the last couple of years, the TCRA introduced a range of regulations and practices that have played a positive role in the mobile market for consumers, such as regulation that lowered interconnection fees, which led to consumer voice services cost reductions. In 2014, the TCRA also introduced Mobile Network Portability (MNP), a facility that enabled mobile users to switch between operators and reduce dependency on one network, thus increasing competition in a market with many operators.
The TCRA also uses fines to ensure operators comply with licence agreements and maintain network service quality, an initiative that has consistently been met with non-compliance resulting in mobile operators receiving multiple fines in 2016 and 2017.
Tanzania’s mobile market was once a political asset for attracting foreign investment and prospects of growth in the telecommunications market sparked a number of new entrants. Telecommunications operators were ushered into the markets during a period of laissez faire politics during the 2000s that focused on allowing new operators the freedom to map their own infrastructure networks, set their own service tariffs and provide services with minimal intervention. While this development is indicative of a general trend experienced by other countries in the region, the TRCA’s approach to regulation has been generally more pro-active when compared to other regulators across Sub-Saharan Africa.
One example can be drawn from the TCRA’s regulatory policy with regards to mobile money services, which were first introduced in the market during the late 2000s. In 2007-2008, the M-Pesa, a Mobile Financial Service (MFS) technology, from Safaricom (part-owned owned by Vodacom) was introduced in Kenya and Tanzania and was able to thrive due to low taxation and an initial lack of regulatory oversight. Yet, while in Kenya, Safaricom was able to gain a monopoly in the country’s mobile financial sector thanks to a special licence from Kenya Central Bank, which outlined more relaxed conditions for the service, in Tanzania the TCRA took pre-emptive steps to avoid the monopolisation of the MFS market. These measures forced all operators in Tanzania to make their MFS networks interoperable, ensuring competitive practice within the mobile market and lowering the cost of sending payments between networks. Thus, the TCRA’s intervention stopped the operator from gaining disproportionate power in the mobile money market.
Similar trend in increased regulatory oversight can be observed in other telecommunication markets across the region. In recent years, regulatory policies aimed at consumer protection and promotion of competition has been on the rise. However, coupled with local currency devaluation, too stringent regulatory environment can be damaging for the operators and in turn the markets itself. Across the region, operators such as Bharti Airtel have been pushed towards asset consolidation and Millicom (trading as Tigo) has also begun implementing plans to exit the continent by selling their smaller networks and consolidating their larger operations.
Therefore, the TCRA may need to re-evaluate the impact of the stance it has taken towards mobile operators in relation to fines and SIM registration to allow operators time to adjust to the changing regulatory environment, which has negatively impacted operator revenues and seen ARPU fall across the region.
The one way to improve operator compliance could be for the TCRA to engage in a consultation process with the operators in order to introduce more realistic guidelines and investment plans. The enhanced cooperation between the regulator and the operators should then lead to increased quality of service, as well as to a better alignment of operator investments with current market demands, which will help limit potential operator withdrawal from the market.