My colleagues at Styx Technology Group are looking at alternate approaches to telecos in Uganda to increase their ARPU (Average Revenue Per Unit) a metric for revenue from each customer, instead of the current price war tagged to 3/= per second (US$ 0.1 per minute).
- Accept that voice is now commodity, being pushed further out by VOIP for both regular users and business, due to the improving Internet connectivity both via fixed and mobile connections. There is no longer a competitive edge to having cheaper voice, the revenues are fixed and can only go lower
- Bundled services: Currently there are separate plans for voice, SMS and data, which have to be purchased daily or when needed. The monthly plans have a premium attached, so without looking at the numbers I suspect that a majority of the regular users purchase daily plans as and when is needed. The telecoms can create bundled plans (already existing for voice) to include SMS and data without the hefty premium. Additional incentives can be provided for further discounts when a user pays consistently for a plan for 6 months, without any breaks.
- Smartphone Device and Service Contracts: While these are being gotten rid of in the US and Europe, the market in Uganda is ripe for disruption, where smartphones are paid over 12 to 24 months, with bundled services. Obviously the argument here is the risk associated with lending in Uganda, but options include partnering with financial institutions can help reduce the risk profile, work through employers to deduct the costs of the contract directly at source.
- Multiple Smartphone Data Plans: This is similar to the device plans above, however this allows the owner of the plan to register additional devices for monthly fee to share the data. This has been common with unlimited plans, and would provide a new revenue stream.
- Extending Mobile Money Services: The best service to copy is PayWay with a wide range of devices, and platforms on which to use the service based on what infrastructure the agent has. I would like to be able to swipe my VISA card and transfer money to my account without having to go through the bank interface which tends to be down more often than not.
- Bulk Sales of Devices to Schools: The new underlapped customer base, sell more devices to schools get parents to pay part of the costs to push e-education services, why do kids still have to fill Advanced Level and University Level choices on paper forms that can be lost? With powerful tablets in the $50 to $100 range only the telecoms have the clout, network and drive to push this through.
- Custom Devices and Services: These are for data collection needs, surveys etc, which can be accessed through third parties but pushing the envelope on what is possible. The key here is flexibility of service, enabling channel partners build and innovate by creating custom services and plans to meet their specific needs.
The telecoms need to think of blue ocean strategies to create new markets, provide ability for others to leverage their platform investments for new revenue channels, leveraging the example of Amazon that has created a multi-billion dollar technology infrastructure business based on solving internal problems.
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?
- 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
- 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
- Round 3 – 2009 to 2012: Mobile Money wars
- 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:
- Mobile Money Partnerships – with banks, utilities, and other commercial players to entrench mobile money transfer deeper into the economics of the country.
- 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.
- Personalized Bundles – combined voice, data and SMS bundles are not yet the rage, but they will gain prominence
- 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.
- 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.
- 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.
- 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:
- Niche players – ISPs for Internet and data as the capabilities for deploying metro-wide WIFI accelerate, informal money transfer services especially under Islamic banking
- Regulatory pitfalls and taxes – the impact of the recent 10% excise duty on mobile money fees is yet to be assessed
- Mobile Virtual Network Operators – are they friend or are they foe? Partner or competition if running atop of your infrastructure?
- 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
- 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
By now all of you know that the mandatory simcard registration by Uganda Communications Commission (UCC) has gone naught, died a natural death like most Ugandan projects, a white elephant dead on conception. Sam Agona (http://www.samagona.org/?p=14) hit on the nail why UCC could not enforce its threat.
The approach I am proposing has the following strategic objectives:
- Simplifying the process for the customer not the telecom providers
- Centralized registration for telcos while segregating the data for each telco (Do I smell Number Portability ahead)
- The minimum registration information for each telco is the same while allowing for each telco to collect more data as may be required
The high-level architecture is as follows:
- The telcos form a joint venture to manage the centralized registration system to keep it away from government to cater for privacy concerns, which can be mandated by the regulator or paid for from telco contributions to the regulator development fund
- Each telco pays based on the number of simcards registered – they are already paying agents a commission to register users anyway
- The data for the subscribers for each telco are segreagated from each other but a user can access their registration information across the different telcos (technically this is no-longer a deal breaker)
- A single set of mobile applications is used to register the customers – with each telco having an option to customize and brand the application for its own use
- A unique sim-card registration number that’s only useable within this system, similar to the Financial Card Number for the credit reference bureau
- Ability for a customer to add more simcards to their portfolio, does not have to be online or automated, but without the need for submitting all the documentation all over again
- Support for business customers to register and maintain simcards (this also needs to be looked into as it can be used to circumvent why the registration was done in the first place
- REQUIRED: An interface (not necessarily automated) to validate “official” documents like:
- Passport – for Ugandans at least via Ministry of Internal Affairs
- Drivers Licenses – Face Technologies – they already have tablets for Police to verify validity
- NSSF Cards – okay I know these are not available but they took my photos and biometric
- Corporation IDs (I am not sure how this would work since there are many briefcase companies abound)
- Voter Registration cards – Electoral Commission?
- Corporate Registration – Uganda Registration Services Bureau and Uganda Revenue Authority (TIN/VAT numbers)
The next question is who pays for the operations of this center which may be an annual service fee for the telcos based on the numbers of simcards maintained with fees for addition and removal of simcards, “accurate and timely statistics” on Uganda mobile telco industry.
What are your thoughts? What else could be added?
On March 5, 2012, Uganda Communications Commission (UCC) launched a simcard registration exercise see my coverage at http://wp.me/pXn3W-4H. On February 28, 2013, all un-registered simcards will be switched off by the telecom providers so there is a concerted push to register the simcards. Estimates put registration at about 50%, but that number is to be put to the test at the end of the month.
This simple guide is to enable you to check for your registration (operators in alphabetical order)
UPDATE 3: November 2015 – all operators now use *197# and messages have also been updated
- Airtel – *197#
- Response – SMS Message from KYC with text “Dear NAMES 075XXXXXXX,your Airtel Simcard has been sucessfully registered. You can now also send and receive Airtel Money”
- MTN – *197*1#
- Y’ello NAMES, your SIM card was registered successfully. Thank you for choosing MTN.
- Orange Uganda – *197#
- Response -You have successfully registered 079xxxxxxx in the names of NAMES
- Smile Telecom – not offering mobile cellular services, all Internet customers are registered on signup
- Uganda Telecom – *123#
- Response – Dear NAMES, your number 071XXXXXXX is now fully registered with Uganda Telecom. Thank u for choosing UTL. It’s all about U
- Warid Telecom – *197# (same as Airtel above)
UPDATE: I have just been informed that dialing *197# can be used to check the registration status for any simcard (Thanks to alwangac via I-Network)
UPDATE 2: MTN simcard registration check is now functional
Did I miss anything or did this post help you, let me know