The Telecommunications Industry In Tanzania Marketing Essay
|✅ Paper Type: Free Essay||✅ Subject: Marketing|
|✅ Wordcount: 3725 words||✅ Published: 1st Jan 2015|
The current business environment is very competitive; therefore it is very important for the new investor to conduct a thorough analysis on the industry she/he interested so as to evaluate its profitability as some industries are more profitable and attractive than others. Even the existing companies need to do the same because the industry profitability can change with time.
The information derived from this analysis will help the decision maker to formulate or review the strategies which will enable the company to utilize its resources and create value so as to move forward
There are several environmental factors which assist or hinder the profitability of the industry.
Different methods are used to do the analysis; these includes Michael Porters industry structure analysis, SWOT, PEST etc .Analyzing the competitors enable the company to identify its internal strengths and weaknesses in relation to environmental opportunities and threats and take advantage of them.
In this report, I shall analyze the industry structure of ZANTEL LTD (TZ) which is a mobile communication company. I’d strive to analyze its strengths, weaknesses, opportunities and threats by considering both the macro-environment and micro-environment, with the efforts of ZANTEL to create value by putting value creation first rather than growth. The strategies used would also be scrutinized to assess its apriority application.
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Degree of Concentration – Today, the telecommunications industry in Tanzania is occupied with more than six of private players including Sasatel, Afritel and other small operators who are constantly bringing down the cost to consumers as competitors cut prices. Making services more affordable help to improve life in general and business in particular. Strong competition is a threat to ZANTEL as small company. 12
The country’s policy of liberalizing the economy mark the end of monopoly of the Tanzania communication company and pave the way for other investors in that industry, as a result currently there are six cellular companies in the country each having coverage in almost every part of the country. I’ve chosen ZANTEL the fourth runner in the industry to analyze its industry structure using SWOT as a method. Its fastest growing capability drives me to evaluate its internal and external environment which contributes to its sustainability.
SWOT is tool used to analyze the internal and external environment of business or organization; it provides a frame work for reviewing strategy, position and direction of the company. SWOT stands for strengths, weaknesses, opportunities and threats.
Zantel is Tanzanian company operating in communication sector. Originally was a regional operator operating only in Zanzibar until 2005, when Zanzibar Telecom was granted a national license to operate fixed line and mobile telephone services throughout the United Republic of Tanzania. Zantel is partially owned and totally managed by UAE telecom giant Etisalat which is among the top 500 corporations in the world and has a presence in 15 countries in Africa. The total number of subscribers is about 150,000 and network capacity is about 250,000 connections . In the year 1999 ZANTEL become a joint venture comprising four owners.:
Zanzibar Telecom Ltd was officially launched on 19th July 1999.However; its commercial operations commenced on August 1999.With its own international gateway, Zantel offers International communication services with reasonable rates 
(Etisalat’s Zantel unit looking to capture 35% market share within three years)
2.0 ZANTEL BUSINESS ACTIVITIES
Major products and services offered by Zantel includes Standard telephone Services (TSTN),International traffic and carrier services, GSM cellular networks, data communications service and the internet, CDMA, IP telephony and VoIP(Voice over Internet Protocol), International calling services, Value added network service (VANS), Fax and Payphones .
3.0 THE MISSION OF ZANTEL
We are a home grown Tanzanian Company with a mission and a passion to change the lives of all our customers
4.0 ZANTEL’S KEY COMPETITORS WITH THEIR MARKET SHARES
Communication industry in Tanzania is highly competitive, with every mobile company claiming to be the industry leader. However this is only a myth, as the reality will be seen through market share occupied by each company. Currently the market structure is dominated by Vodacom.
Communication Industry in Tanzania 
According to TeleGeography’s GlobalComms database, by the end of March 2008 Vodacom was the largest mobile operator in Tanzania with an estimated four million customers, up from 3.87 million at the start of the year, followed by Celtel Tanzania with 2.59 million, Tigo (1.45 million) and Zantel, with a million 
5.0 ZANTEL’S BUSSINESS STRATEGY
A company needs to be identified by its customers differently from others. Customers build a positive perception on your company depending on how it had positioned in the market place. ZANTEL had positioned itself as a low cost provider which considers the Economic capability of Tanzania as a less developed country with the large number of its people being poor. Zantel with its wide range of innovative and affordable products and services offers the lowest flat rate for its subscribers to make across the networks calls. Through the Sawa Sawa tariff a Zantel customer can call any other network for TSH 3.8 per second which is almost 40% lower that what other operators are charging.
The chief executive of Zantel, Noel Herrity said Zantel had 1 million subscribers at the end of March . It had just over 684,000 subscribers at the end of 2007 according to the Tanzania Communications Regulatory Authority.
ZANTEL INDUSTRY STRUCTURE ANALYSIS
ZANTEL’s rapid growth is a result of efficiency and effective management and control of its internal controllable factors and external uncontrollable factors of environment.
5.1 ZANTEL’S BUSINESS STRENGTH ANALYSIS
We can define the ZANTEL’S strength by looking on the positive aspects that contributes to the performance of that company. To analyze the company’s core competence in the market place by considering the financial resources, market shares, buyer suppler relationship and company image etc.
Coverage – ZANTEL has got a great coverage all over the country and internationally through Vodacom and Etisalat this means it has great ability to reach many customers around the world.
ZANTEL’s partnerships with other national and international organizations -Company’s partnership is a great strength because Unity is strength Since ZANTEL is owned by four stakeholders it has a very strong capability to manage its
activities financially, technologically and by skills as well as experience for example Etsalat has a long time experience in the industry all over the word.
Local and International Collaborative strategy – This is another strength. Zantel is using a collaborative strategy to create value to its customers by collaborating with national and international institution with common interests in communication services. Currently the company has a roaming agreement that allows it to use Vodacom’s masts on mainland Tanzania to supplement its own. This is strength since Vodacom has a good and reliable network coverage all over the country compared to Tigo which has a limited coverage. This saves cost and time and increase efficience. We are teaming up with Thuraya to provide satellite service at mobile phone rates .This allows users of UAE to use Zantel’s network. Herrity said. Emirates Telecommunication is Thuraya’s largest shareholder  .
Others includes Eskadenia agreement with Zantel. This agreement underlines ZANTEL’s trust in ESKADENIA’s proven track record to deliver advanced turnkey systems for telecom operators and in ESKADENIA as a leading regional supplier of Customer Care & Billing solutions. We consider this important agreement as the start of a long term business relations with ZANTEL”, said Nael Salah, Managing Director of ESKADENIA. http://www.eskandia.com/news/zantel.9sp
Management ability – The ability of the management to identify its competitors and come up with the right strategies is a strength.ZANTEL has got only four years of experience in Tanzania mainland but it has strived to incerease its market shares and compite with more experinced companies.Ofcouse it is easier to make strategies if you know your rivals ability.
Product value is also a strength – The ability of ZANTEL to provide a qualitable communication service is a strength since customers are sure of the quality they expect when they are into ZANTEL’s
network.This is a strategy ZANTEL use by putting value first rather than growth that’s why they grow slowly but surely. “We believe Tanzanian’s should get the best value for money and the best coverage at the best price” asserted Mr. Lawler .
Competent emloyees – Human is key resource in managing the business.ZANTEL have got a very competent emlyoyees with the right skills in the industry.
5.2 ZANTEL’S BUSINESS WEAKNESSES ANALYSIS
The same factors which might be considered as strengths can become weaknesses if hinders the overall performance of the company.
Inability to utilize resources – ZANTEL had failed to fully exploit information technology for communication and networking. Tanzania large population provides greater potential in the industry but Zantel had acquired only 1 million.
Lack of their own infrastructures – To depend on others is some sort of being a slave as you have to obey the way others wants you to behave in order to maintain that relationship. The company is totally reliant on its correspondent telecommunication relationships to its local and international business which is very dangerous for the survivor of the company in front of its competitors, if its correspondent company shake Zantel will also shake, the worst scenario will face is if the correspondent should close such relationships.
Masculinity vs. femininity – The Company has gender imbalance, as 78% of the employees are male while only 22%  are female. This reflects the higher masculinity culture where by male are given more priority than female. The country is fighting to bring equal rights to both.
5.3 ZANTEL’S BUSINESS OPPORTUNITY ANALYSIS
These are environmental factors which favors the performance of the company to make profit. It includes political, social, economical and technological factors.
Promising market for the mobile communication services – Currently the demand for the mobile communication services is increasing very rapidly since more people are aware of the service and its contribution to their well being. The future seems to favor ICT application which will use mobile device. According to Gillwald et al. (2005) in Tanzania more people have access to mobile devices than to normal computers.
2% of all households in Tanzania have at least one working computer while 15% of all households with working computers are connected to the Internet. 44% of people in urban areas have access to mobile phones while in rural areas only 8% of people have access to mobile phones (Gillwald et al., 2005, pages 154-160)
Development in Technology – Introduction of new technology change the way business is operated to make it more profitable, as it increases the number of customers and high margins. Discovery of fiber optic makes hope to the communication companies as well as to the customers, because it is more speed and effective so it lowers the operational costs as a result lower the products prices.
The Internet costs might drop in future when Eastern Africa Submarine Cable System (EASSy) project will be implemented. EASSy is the undersea fibre optic cable that will link the countries of East Africa to the rest of the world  . This is an opportunity for the industry to be more profitable.
National economy – Tanzania is in transitional stage moving from centrally planned to free-market economy which is more favorable for investment. This paves the way for local and foreign investors to invest in the communication industry. There is no intervention from the government, this builds good relationship between the industry and the government.
National Regulations and attitude towards the business – The laws of the country have got positive or negative influence on the business. The Tanzania Communication Regulatory Authority (TCRA) regulates Tanzania’s telecommunications industry.
The TCRA has adopted a new framework, striving to promote and develop the ICT sector in Tanzania. The business opportunities within the ICT sector are numerous. The mobile telephony business is expected to expand with more than 50% over the coming period of time and projects of expansion and improvements are numerous  This shows that the laws in the country create the right environment for the industry.
5.4 ZANTEL’S BUSINESS THREATS ANALYSIS
These are environmental factors which hinders the performance of the company to make profit. It includes political, social, economical and technological factors.
Threat of new entrants – The mobile communication industry in Tanzania is in the growth stage with rapid growth of sales and high profit. This attracts new players to enter the industry and give rise to the level of competition. As a result supplies goes up and lower prices which affects profit margins. profit starts to decline.
Taxation – Tanzania Revenue Authority is posing a threat to the communication industry as it is charging high taxes which drive back the efforts of the players to bring change to life’s of many Tanzanians so that mobile phone to be perceived as luxury rather than a need for development because communication is vital for every person in rural and urban areas.
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But the shocking news was the revelation by the study that Tanzania was second to Turkey in the world’s 10 countries with the highest rates of taxation in the mobile phones sector. A later survey revealed Tanzania was in the top 10 “Roll of shame.”At the time of the study, taxes in Tanzania made up 29.4% of ownership costs .
Degree of Concentration – Today, the telecommunications industry in Tanzania is occupied with more than six of private players including Sasatel, Afritel and other small operators who are constantly bringing down the cost to consumers as competitors cut prices. Making services more affordable help to improve life in general and business in particular. Strong competition is a threat to ZANTEL as small company.
Resource constraints – Unreliable supply of power by Tanzania Electric Supply Company, a monopolistic company is a big threat to the industry as it increases the cost of production because at the time of shortage company need to find alternative sources such as use of generators which are very expensive. This affects the profit margins of the company.
Rate of turnover – The mobile communication sector is facing a threat of higher turnover rate among rivals Poaching of competent and skilled labors is something common to this industry because of technology spread.
Cyber Crimes – While cyber crimes pose a significant threat to the development of electronic transactions Tanzanian Laws do not recognize criminal activities on the internet. For example illegal intrusion into a computer system can not be prosecuted with the current legislations which require physical presence. Discussion paper has covered this aspect of criminal activity 
Currently the government is striving to introduce the cyber security legislation and the mobile company had started to register their customers’ phones as the action towards the government goal.
Data Protection – There is a threat which the use of data processing techniques can pose to the rights and freedoms of those individuals whose personal data is subjected to some form of automated processing3. There is no law in Tanzania which protects data or databases in Tanzania. The main concern here could be the right to privacy, data protection and danger of information misuse. The discussion paper has also covered these aspects 
Registration of mobile phones is currently in motion with the objective of protecting the misuse of information and data protection.
6.0 CONCLUSION AND RECOMMENDATION
As more and more countries are joining the networked economy, development in the telecommunication sector in Tanzania becomes a key tool for people’s economical development because community needs appropriate and accurate information in order to better manage and monitor their value chain. This is very important especially in globalization era.
There is great need for the whole country to be well connected locally as well as internationally otherwise we will be living as if we are in an “isolated highland” discriminating ourselves from the world.
Mobile companies including ZANTEL are working towards that direction with the objective of connecting people in order to change their life “making life ease” through communication tool.
As shown in my report there are opportunities and challenges. But the environment is very conducive for profitability of the industry. The possibility of Zantel to grow from 10% to 35% in the coming three years according to Zantel’s Chief Financial Officer Arthur Hudson , is obviously because of the huge growth potential in the country. On my opinion competition intensity among rivals is a big challenge to tackle since the first three competitors are stronger compared to ZANTEL but “where there is a passion there is the way”. The following need to be considered into strategies in order to attain the goals.
Promotion strategies – Promotion is a very powerful tool used to capture the market. Zantel are supposed to do more promotion in order to build a new perception in the minds of customers since they perceive it as a Zanzibarian company for Zanzibarians.
Also they need to focus on the means used for advertisment. BILL BOARDS advertisment is not enough and it is limited as one needs to go to that place in order to be informed, also it is in big cities specifically in city centres.The use of TV advertisement is very effective since it reaches many people at a time.
Society Marketing – is a good strategy where the company returns part of its profit to the society by assiting the construction of schools, educational materials supply, digging water wells, sponsoring let say football matches,big events like fiesta,live shows of popular musicians. This has positive impact in the societ.
Market expansion – There is a chance for Zantel to expand its market to the neibouring contries like Kenya,Uganda, Rwanda, Burundi and others so that to take the opportunity of the East Africa regional intergration.
On the other hand the Government is adviced to cut down the mobile services taxes in order to boost the usage.This help the small companies like Zantel to increase the market share.
Telecommunication is a vital ingredient for economical development and not a luxury service for certain people
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 Marketing Management, 12th Ed SWOT Analysis Phillip Kotler, Kelvin Lane Keller Publisher Pearson
Prentice Hall 2006
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