Vodacom Tanzania Acquires Smile for $27.4 million to Support the Launch of 4G and 5G Network Services

Vodacom Tanzania PLC, a popular telecommunications provider in Tanzania, has finalized the acquisition of Smile Communication Tanzania Limited.

Smile is a smaller telecommunications company that was purchased for 68.8 billion Tanzanian Shillings (approximately USD 27.4 million).

Vodacom Tanzania Acquires Smile

The agreement will see Vodacom acquire 100% of Smile’s issued share capital at TZS 0.24144 per ordinary share. Note that the deal was structured as a “debt-free, cash-free” deal.

This means that Vodacom will not take on any of Smile’s debt or hold on to the cash from the company at the time of the acquisition. This significant move by Vodacom aims to strengthen its capabilities in rolling out advanced 4G and potential 5G services. This positions the company as a top player in Tanzania’s telecom market.

The deal grants Vodacom access to Smile’s 800MHz and mid-band spectrum. Additionally, Vodacom can use Smile’s 4G LTE network. The new spectrum from Smile will add to the frequencies that Vodacom acquired in Tanzania’s auction in October 2022, where the company splurged $63.2 million to secure access to frequencies in 700MHz, 2.3GHz, and 2.6 GHz.

Vodacom will now consolidate its presence in Pwani, Dar es Salaam, Morogoro, Dodoma, Mwanza, Mbeya, Kilimanjaro, and Arusha as its 4G network coverage expands.

The Acquisition Represents a Strategic Expansion Of Vodacom

The 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 that invested over $235 million in a rescue operation for the company just two years prior.

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.

Conclusion

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 VTPLC brand is unlikely to significantly boost the company’s substantial market share.

However, 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 the telco to further build on its market leadership and potentially introduce additional telecommunications innovations in the future.

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