Vietnam-based mobile telecom operator Viettel is set to start operations in Tanzania, aiming to expand into other countries in the East Africa region.
The Tanzanian government last week announced that it had awarded Viettel a license to build and operate a 3G mobile phone network in the country. The operator is expected to use Tanzania as a path for further investment in Africa. Viettel has already indicated its intention of entering the Kenyan telecom market through a possible purchase a 70 percent stake in Telkom Kenya.
Initially, Viettel wanted to enter the Kenyan market through the acquisition of yuMobile but dropped the bid. Orange Telecom has indicated that it will shed its ownership of Telkom Kenya and leave the Kenyan telecom market because of stiff competition resulting from the sale of yuMobile to Safaricom and Airtel.
Although Viettel has an operation in the Southern African country of Mozambique, the Tanzanian venture is the first time that the company is entering the East African telecom market, where it will compete with South Africa's Vodacom, India's Bharti Airtel and Zantel, a unit of Etisalat, based in the United Arab Emirates.
Viettel is also said to be pursuing a license in the Central African nations of Cameroon and Congo.
The entry of Viettel into the East African telecom market is expected to ignite a price war as operators fight for new customers and maintain existing ones.
In Mozambique, Viettel has covered nearly 600,000 people in at least five rural districts.
In Tanzania, the operator will also mainly focus on rural areas, according to the country's deputy minister of Communications, Science and Technology, January Makamba, in last week's announcement. As in many other African countries, thousands of people in Tanzania remain unconnected to mobile communications.
The Tanzanian government has for a long time been trying to push operators to connect their networks to remote rural areas in order to meet the growing demand for inclusive and effective communications, but with little progress.
Makamba said the decision by Viettel to roll out its network to remote rural areas is in line with the Tanzanian government's objective of making sure that all rural areas of the country are connected to mobile networks in order to ease communication problems.
The Tanzanian government expects Viettel to connect about 4,000 villages to mobile phone communication by 2016. Edith Mwale, telecom analyst at Africa Center for ICT Development, said Viettel's strategy of pushing its network to rural areas will help it grow quickly not only in Tanzania but also in other African markets where the operator intends to expand its services.
"For a long time, operators in Tanzania just like other African countries have just been fighting for customers in urban areas. Viettel's focus on rural areas will now force other operators to also spread their networks to rural areas or lose out," Mwale said.