Tigo Tanzania adds 1 million mobile money users, eyes further growth

* Huge growth in mobile money transfers in East Africa

* Tanzania's total mobile phone subscribers 27 million

By Fumbuka Ng'wanakilala

DAR ES SALAAM, June 5 (Reuters) - Tigo Tanzania, a unit of emerging markets telecom group Millicom Cellular International, said it had added 1 million mobile money service users over the past year and now wants to expand further in the fast-growing market.

Mobile money transfers, pioneered by Vodafone's Kenyan unit Safaricom, have grown rapidly in east Africa, offering companies an easy way to tap a market where many people do not have bank accounts.

Users can use such services to pay for goods, pay bills, make deposits and withdraw cash from authorised agents using their phone.

Tigo, the No. 3 mobile phone operator in Tanzania, has over 6.2 million out of the total 27 million mobile phone subscribers in the nation of 45 million people.

Diego Gutierrez, Tigo Tanzania's general manager, told Reuters the company's mobile money transfer service, Tigo Pesa, was a key growth area which already accounted for a significant share of the company's total revenue. He did not specify what the share was.

"Mobile money is a very important part of our business and it is growing at a very accelerated rate," Gutierrez said, adding that Tigo Pesa now has 3.4 million users.

Tigo announced on Wednesday a deal with two other mobile phone operators in Tanzania - Bharti Airtel and Zantel, a subsidiary of Etisalat - that would allow customers of the three telecom firms to conduct mobile money transfers across their networks.

Gutierrez said the mobile money transfer agreement, the first of its kind in Africa, would further expand the use of mobile money transfers in east Africa's second-biggest economy.

He said there was still plenty of growth in Tanzania's competitive telecom sector, helped by favourable demographics which boast a young population

"This young population is starting to enter into the economy so I think that the perspectives of growth for Tanzania are quite interesting," he said.

Tigo launched a mobile money transfer service between Tanzania and Rwanda in February, opening a potentially lucrative market in cross-border mobile transfers.

Vodacom Tanzania, an arm of leading South African mobile operator Vodacom, is Tanzania's No. 1 mobile phone firm with 10.3 million subscribers, followed by Bharti Airtel, which has 9 million customers. 

(Editing by Drazen Jorgic and Pravin Char)