Probability Modeling of Customer Switching Behavior and Voice Tariff Disparities in Tanzanian Telecom Markets

Laurent L Lulu

doi:10.59645/tji.v4i1.237

Authors

Laurent L Lulu Institute of Accountancy Arusha, Department of Economics

DOI:

https://doi.org/10.59645/tji.v4i1.237

Keywords:

voice tariff disparities, customer switching behavior, telecom operators, customer retention

Abstract

The telecommunications sector has experienced significant growth, driven by technological advances, improved internet access, investment from both the private and public sectors, and competitive pricing. Therefore, it is crucial to understand the factors that influence customer switching. This study examines voice tariff disparities between telecommunications operators in Tanzania and determines the probability of customer switching behavior. This was achieved by analyzing the relationship between tariff differences and the likelihood of customers switching service providers. A quantitative research approach was used using secondary data from the Tanzania Communications Regulatory Authority (TCRA), covering the period from the quarter ending March 2023 to the quarter ending June 2024. Descriptive statistics and logistic regression were used to model the effects of tariffs on switching behavior. Findings indicated that higher local SMS and on-net voice tariffs significantly increase the probability of customers switching providers, while higher international voice tariffs surprisingly reduce the likelihood of customer switching behavior. The study concluded that competitive pricing, particularly in SMS and local voice services, is essential for customer retention. It recommends that telecom operators focus on cost-effective service offerings and improve network quality to minimize churn. Future research should explore the dynamics behind the lower switching tendency for international services to enhance retention strategies for premium service users.

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