Tanzania’s largest mobile network operator, Vodacom, said it is investing 200 billion shillings ($124 million) to develop and grow its business in Tanzania, but complained that rising taxes could stifle the sector.

“This year will see us invest TZS 200 billion in network expansion, data and M-Pesa (mobile phone cash transfer service),” Managing Director for Tanzania, Rene Meza told Reuters on Wednesday.

Vodacom spent 230 billion shilling ($142 million) last year to build over 890 network sites.

Vodacom hopes the service expansion will help pull more subscribers despite stiff competition from the likes of Airtel Tanzania, India’s Bharti Tigo Tanzania, Millicom International Cellular and Zantel.

Vodacom Tanzania, which began operations in the year 2000 serves 9.7 million subscribers as at June this year. According to the Mobile Operators Association of Tanzania (MOAT), Tanzania, a nation of 45 million people has a mobile penetration rate of 48 percent (about 22 million subscribers).

Telecommunications is the fastest growing business sector in East Africa and the government is determined on getting a bigger share of revenues.

However, taxation in East Africa’s second-largest economy had become difficult for mobile phone operators.

Operators said the new tax of TZS 1,000 (62 cents) per month on every SIM card and an excise duty of 0.15 percent on money transfers introduced by the government in July could hurt telecommunication market’s growth.

“The mobile industry in Tanzania is already heavily taxed. Additional taxes will definitely discourage investment particularly for rural expansion,” Meza said.

Vodacom Tanzania early this year said it paid total corporate tax of TZS36.5 billion ($22.5 million) in the 2012/2013 financial year – a 20-fold increase on the amounts it has handed over in the last three financial years.

Tanzania’s president Jakaya Mrisho Kikwete has however frozen enforcement of the new tax pending a review after a public outcry.