South African headquartered Vodacom Group plans to pay $250 million to increase its stake in its Tanzania unit from 65% to 82.2%, as telecoms competition in the East African nation heats up.

South Africa's Vodacom Group, which is a unit of Britain’s Vodafone, plans to pay a minority shareholder cash for the shares. Vodacom, though, has to await approval for the deal from the South African Reserve Bank.

Vodacom is the biggest mobile operator in Tanzania, with 10 million subscribers: a strong motivating factor for the telecoms firm looking to increase its stake there.

In turn, Tanzania is among East Africa’s most competitive mobile markets with Bharti Airtel, Tigo and Zantel competing with Vodacom. Also, mobile penetration in Tanzania is forecast 2013 to hit 75% of the country’s over 47 million population, according to BuddeComm research.

“The government has actively embraced the principles of competition and a private sector including foreign participation as a means of rapidly advancing economic and social development,” says BuddeComm in its Tanzania country profile.

“Policy reforms have led to the telecom sector becoming among the most liberal in Africa. However, high import tariffs on telecoms equipment and taxes on telephone facilities by various authorities are still placing a burden on investors and operators,” adds BuddeComm.

Vodacom is South Africa’s largest mobile operator. But its African reach is smaller than that of MTN, which has 203.8 million subscribers across the Middle East and Africa.

In South Africa Vodacom says it has over 50 million subscribers, while its international operations have over 22 million subscribers.

Vodacom a presence in Mozambique, Lesotho, Nigeria and the Democratic Republic of Congo (DRC).