By Fumbuka Ng'wanakilala
DAR ES SALAAM (Reuters) - Vietnam-based telecoms operator Viettel plans to invest $1 billion in a new third-generation (3G) mobile phone network in Tanzania, the office of the east African country's president said on Tuesday.
The mobile telecoms sector in east Africa's second-biggest economy has grown rapidly over the past decade, driven by demand for 3G mobile services. There are about 29 million mobile subscribers, representing market penetration of 64 percent, according to the country's telecoms regulator.
"Viettel will invest $1 billion in telecoms and other services in Tanzania, hence making Tanzania the second country after Peru to receive its state-of-the-art telecoms technology," the Tanzanian President's office said in a statement.
State-owned Viettel, which is run by Vietnam's Ministry of Defence, won its Peruvian mobile license in 2012.
Viettel chairman Manh Nguyen Hung made the investment pledge when Tanzanian President Jakaya Kikwete visited the company's headquarters in Vietnam on Monday, the president's office said.
The company will offer low-cost smartphones and provide free internet services to schools, hospitals and offices, the president's office added.
Tanzania announced this month that it had granted a mobile phone network to Viettel, which is expected to launch its mobile services next July.
Viettel will compete with the four other main operators: Bharti Airtel, Etisalat-owned [ETELZS.UL] Zantel, Vodacom Tanzania, owned by South Africa's Vodacom, and Tigo Tanzania, which is part of Sweden's Millicom.
Three other mobile operators - state-run TTCL, Benson and Smart - have a tiny market share.
Tanzania expects its mobile operators to list on its stock exchange next year under rules aimed at enabling its citizens to take a stake in one of Africa's fastest-growing industries.
Like other African countries, mobile phone use has rocketed in Tanzania over the past decade, with telecoms the fastest-expanding sector in the country.
Leading telecoms companies operating in the country said they were in talks with the government over the mandatory listing requirements, but most declined further comment.
However, Egypt-based TA Telecom's CEO Amr Shady said the rules are counter-productive to sector growth.
"The ... law that states that new telecoms are required to list on the exchange is extreme. In reality, offering incentives to list would be a much better approach," Shady said in an emailed statement to Reuters.
"Companies such as TA Telecom have experienced many challenges acquiring a license to operate in the telecoms services space in Tanzania. Disincentives and roadblocks for (foreign companies) to come to Tanzania can only hamper Tanzania's long-term competitiveness.”
(Additional reporting Carolyn Cohn in London; Editing by George Obulutsa and David Goodman)