Vodacom Tanzania PLC (VTPLC), a leading telecommunications provider in Tanzania, has finalized the acquisition of Smile Communication Tanzania Limited, a smaller telecommunications company, for a purchase price of 68.8 billion Tanzanian Shillings (approximately $27.4 million USD). Notably, the transaction was structured as a “debt-free, cash-free” deal, meaning that VTPLC will not assume any of Smile’s debt nor will it hold cash from Smile at the time of the acquisition. This strategic move by Vodacom aims to boost its capabilities in rolling out advanced 4G and potential 5G services, positioning it as a top player in Tanzania’s telecom market.
Under the terms of the acquisition, which was formally documented and signed off by both Vodacom Tanzania and Smile’s parent entities, Smile Telecoms Holdings Limited and Smile Telecoms IP Limited, Vodacom will take over the entirety of Smile’s issued shares. The agreed price was set at a per-share rate of 0.24144 Tanzanian Shillings for each ordinary share. This transfer of ownership was officially completed on April 3, 2024, which follows closely on the heels of a significant investment by Al Nahla Group, a Saudi Arabian investment fund which invested over $235 million in a rescue operation for the company just two years prior.
Vodacom Tanzania has emphasized that this acquisition is key to its long-term strategy. They plan to leverage it to enhance their network capabilities while also committing to delivering improved service quality to their customers. The expected outcome is an advancement in mobile network coverage and overall capacity throughout the regions they serve.
An important aspect of the acquisition is Vodacom’s gain of Smile’s operational assets, particularly the valuable 800MHz and mid-band spectrum licenses. These spectrums are crucial for providing high-speed internet services, such as 4G LTE, and lay the groundwork for the potential introduction of 5G connectivity. Vodacom plans to integrate and utilize Smile’s existing 4G LTE infrastructure in its network.
With this acquisition, Vodacom is set to consolidate and amplify its market presence across several key regions within Tanzania including Pwani, Dar es Salaam, Morogoro, Dodoma, Mwanza, Mbeya, Kilimanjaro, and Arusha. The consolidation will effectively allow the company to extend its 4G network coverage, ensuring wider and more robust service availability for its subscribers.
Vodacom’s acquisition of Smile Communication Tanzania Limited represents a strategic expansion of its footprint, although the immediate impact on its market dominance is relatively modest. At the time of acquisition, Smile boasted a customer base of 15,171 subscribers, which accounts for a mere 0.025% of the Tanzanian telecom market’s market share. Thus, the inclusion of Smile’s subscribers under the Vodacom brand is unlikely to significantly boost Vodacom’s already substantial market share.
Prior to the acquisition, Vodacom stood as the market leader within the Tanzanian telecommunications sector, holding 30% of the total subscriptions. As of December 2023, Vodacom’s customer base included 19.1 million subscribers, indicating a robust and dominant presence. The company’s closest competitors were Tigo with a 28% share of subscriptions, Airtel closely following with 27%, Halotel with 12%, and TTCL with a 3% share.
Despite the relatively small addition of Smile’s subscriber base, Vodacom sees strategic value in the acquisition beyond mere numerical increases. Smile Communication, which will now be integrated into the Vodacom Tanzania PLC (VTPLC) brand, was a pioneer in Tanzania’s telecom sector by initiating the 4G LTE mobile broadband service in the country in May 2013. By the end of a decade-long operation, Smile had accrued 13,840 mobile subscribers.
With this acquisition, Vodacom is poised to enhance its technological capabilities, particularly in high-speed internet provision, and solidify its competitive edge in the fast-evolving telecom industry. The consolidation enables Vodacom to further build on its market leadership and potentially introduce additional telecommunications innovations in the future.
The recent acquisition of Smile Communication Tanzania Limited provides Vodacom with a valuable augmentation to its spectrum holdings, complementing the frequencies Vodacom had previously secured in various spectrum auctions. In October 2022, Vodacom invested substantially in the expansion of its spectrum capacity, spending $63.2 million in a Tanzanian auction. This investment provided the company with access to additional frequency bands at 700MHz, 2.3GHz, and 2.6GHz, broadening its capability to deliver advanced mobile network services.
Vodacom’s strategic approach to spectrum acquisition began even earlier, notably with a $10 million purchase in a 2018 auction for 20MHz in the 700MHz band. This band is especially valued for its ability to provide wide coverage and strong building penetration, making it ideal for extending 4G services and laying the groundwork for 5G rollouts in areas with varying geographical and infrastructural challenges.
Alongside these investments, Vodacom’s spectrum portfolio includes bands at 900MHz, 1800MHz, 2100MHz, and 3500MHz. These frequencies underpin the company’s diverse range of communication services and are critical assets in delivering a robust and high-quality wireless communication network.
Per Vodacom’s Annual Integrated Report for the fiscal year ending March 31, 2023, the telecommunications giant outlined the allocation of its spectrum resources, dedicating the majority for mobile services, which remain a primary need for a majority of its customer base. Moreover, Vodacom also highlighted a strategic focus on leveraging the 2300MHz and 3500MHz bands specifically for fixed 4G and 5G services. These high-frequency bands offer the potential for high-speed data transmission, key to supporting the increasing demand for broadband services and the anticipated growth of the Internet of Things (IoT), as well as enterprise and consumer applications that require faster connectivity.
Vodacom’s spectrum acquisitions and strategic allocations underline the company’s commitment to driving innovation and adapting to the evolving market demands, ensuring that it maintains its position as a leader in Tanzania’s telecommunication sector. With the amalgamation of Smile’s spectrum, Vodacom significantly bolsters its capacity to enhance existing services and deploy new technologies, thereby delivering on its promise for improved coverage, speed, and quality of service for its subscribers.
