Why Vodacom winning in Tanzania ?

LIKE it or not, SA business has a poor reputation throughout Africa. The pioneering mind-set of getting business done despite the odds has been overshadowed by the unfortunate arrogance that has accompanied many of our businesses’ forays into our continent.
Emboldened by success at home, SA companies have expanded north. But different market conditions and consumer behaviour, and an unwillingness to acknowledge these, combined with a blindness to the resentment and irritation it instils, have prevented many companies from having similar success abroad.
This is why it’s so refreshing to see a local company thriving, in part because its management is aware of these sensitivities.
Vodacom Tanzania is something of a success story for the operator, says Romeo Kumalo, chief operating officer of Vodacom International, the division responsible for all the territories outside SA.
Key to that has been a change in attitude.
"The model used to be to take the SA market [strategy] and try again. We started changing four years ago, and changed the operating model. We did away with looking at SA as an example, to look at the world as an example."
The foundation of the strategy is the same, Kumalo adds. It focuses on the same key areas: network quality and coverage, customer experience, data, M-Pesa (mobile transactions) and enterprise services.
"Tanzania is seeing massive growth in customers and traffic. Data as a percentage of revenue is still sitting at 60%," Kumalo says. "We’ve done it successfully here by getting customers to try the data, and then introduce bundles and increase average revenue per user." Between 95% and 98% of the market is made up of prepaid users.
"M-Pesa now makes up 22% of service revenue in Tanzania: US$1,2bn moved on M-Pesa, or 35% of Tanzania’s GDP," he told the Financial Mail in Dar es Salaam last month. "The key to success in M-Pesa is distribution, the same as in the traditional GSM business."
It helps that Kumalo is more than your average businessman. The former celebrity station manager of 5FM, who married former Miss SA and businesswoman Basetsana Kumalo, spent many years at Vodacom. He has witnessed its changes; from being 50% owned by Telkom, to the injection of international expertise when Vodafone took an additional 65% stake a few years ago. Vodafone has also taken South Africans abroad (Vodacom Group CEO Shameel Joosub spent three years running Vodafone Spain).
Kumalo expects that Vodacom’s total number of customers elsewhere in Africa (27.1m ) will soon overtake Vodacom’s SA customer base of 32.5m. "We think we can add 11m customers across the portfolio (Lesotho, Mozambique, Tanzania and the DRC) in the next three years."
He adds: "Data is a huge opportunity, not just in Tanzania. In the DRC there is only 3% mobile penetration. When you look at data, one needs all the elements to come together — network, devices, pricing."
This is where Vodafone’s global clout and buying power become useful. It is able to aggressively price its own-branded products.