The Telecom Wars in Uganda – Round 5 – 2015 and Beyond

The telecom wars in Uganda just got a new lease in life, however looking forward the next round will claim some casualties. Why do I call this Round 5?

  1. Round 1 – Oct 21, 1998: MTN comes into Uganda, after a monopoly by Celtel (now Airtel) where simcards fell to the equivalent of US$30 with a monthly service fee of $10
  2. Round 2 – 2007 to 2009: Warid and Orange launch in Uganda, the Value Added Service Provider (VAS) boom, thanks to James Oloo Onyango for pointing this out
  3. Round 3 – 2009 to 2012: Mobile Money wars
  4. Round 4 – 2013 and 2014: Airtel acquires Warid telecom, Smart Telecom & Vodafone join the fray, MTN launches voice bundles

At this point each of the telcom companies operating in Uganda have voice bundles, data and internet plans plus mobile money platforms. With international calling plans falling towards zero, currently even cheaper than local network calls, social media/VOIP/Messaging applications cannibalizing SMS revenues, the battle for survival is ever-fierce with the any mis-step proving fatal.

Looking into my crystal ball, the next round is going to be fought along the following avenues:

  1. Mobile Money Partnerships – with banks, utilities, and other commercial players to entrench mobile money transfer deeper into the economics of the country.
  2. Service Partnerships – can be seen around data & internet services, so that the telecos are not reduced to dumb pipes. The agricultural, health and education sectors will see a new push for value added services via SMS in order to keep the users captive on a specific network.
  3. Personalized Bundles – combined voice, data and SMS bundles are not yet the rage, but they will gain prominence
  4. Family Bundles – with families having more than one phone, I see a push towards shared bundles to reduce the costs of new customer acquisition & increasing opportunity cost of switching. The impact of this tactic will be further complicated by the multi-sim phones that most consumers have.
  5. Smart device leasing plans – one I have called for, complicated by lack of a national ID, but I see success for whoever nails a working version of business model first.
  6. Business Customers: Majority of the telecom usage is personal, however business customers provide an interesting selling point with a knock on effect for smart devices, family or business plans and shared bundles. Most users are forced to use a service or network convenient to the bread winner or trend setter.
  7. Quality of Service: after all that is said and done, when the costs are almost at par, the quality of service for a specific provider will become a critical deciding factor both for business and personal use.

With all this opportunity also comes great peril, from the following:

  1. Niche players – ISPs for Internet and data as the capabilities for deploying metro-wide WIFI accelerate, informal money transfer services especially under Islamic banking
  2. Regulatory pitfalls and taxes – the impact of the recent 10% excise duty on mobile money fees is yet to be assessed
  3. Mobile Virtual Network Operators – are they friend or are they foe? Partner or competition if running atop of your infrastructure?
  4. Market saturation with falling revenues per customer – the telcos need to innovate to stay atop of the fast moving market that is to render them dumb pipes and their services commodity
  5. Number Portability – when this comes, it will disrupt the players as it abstracts the underlying providers.

How do you see the telecoms responding to these threats, please share in the comments below ….

UPDATE: Round 2 includes VAS providers who saw exponential growth in revenues at this time using SMS based solutions

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4 responses to this post.

  1. Posted by Hanifa on November 20, 2014 at 9:55 pm

    Actually Round 2 was when Mango hit the market in 2000 and service fee was scrapped along with the introduction of airtime that cost less than 10,000 shillings.

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  2. Very nice article & articulation of the situation as it is. Perhaps my only add would be that for a number of 7-8 Telco’s in market, a sordid 30% TeleDensity rate, and the fact that to enable universal access to telco’s, the handset still remains a barrier, it doesn’t matter any more how many we have.

    What really matters is who is really getting services down to the masses and whether these services are really being felt so that it enables that universal access that we want all Ugandans to have.

    To be honest, you only need to look at the following factors to make a judgement: 1.) Who’s invested far and deep to enable Ugandans have easy-reach (not arm-length) access to the service; 2.) Who’s endeavoured to have network access (in whatever form, whether GPRS, EDGE, 2G,3G) to give locals a “first-time” experience with data/ other; 3.) democratising of financial services; 4.) Basic access to customer service or at the very least, some form of service even if from a Duka; 5.) Through direct/ indirect means, how many people benefit from them, how much tax do they pay, how many people deal in their products and what impact they have where they invest; 6.) Finally and most importantly are they a responsible citizen truly giving back to the communities they service, whether directly/ indirectly.

    The above will truly determine who is really adding real value to Uganda, whether they are here to stay and perhaps and lastly if they are a consistent, responsible investor, not just another telco.

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  3. […] This blog post follows the same thinking as The Telecom Wars in Uganda – Round 5 – 2015 and Beyond on this blog […]

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