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Fears over MTN, Airtel dominance in Uganda’s telecom sector

The two firms control nearly 90% of the market

| THE INDEPENDENT | The looming dominance of MTN and Airtel in the country’s telecom industry following the planned exit of Africell Uganda could expose customers to poor quality of services and price exploitation, experts say.

Paul Lakuma, an economist and research fellow at Makerere University Economic Research Centre told The Independent in an interview that there is a possibility of dominant players fixing prices in their favor as theory teaches.

He said it is high time that the regulator, Uganda Communications Commission, keeps the remaining operators in check in terms of quality of service and price changes.

“UCC should continue to do what it has been doing; if tariffs change, they must be justifiable,” he said.

Irene Kaggwa Sewankambo, the acting executive director said, although Africell did not have a big market share in the country’s telecom sector, their exit is regrettable.

“Their exit is reducing the options that customers have,” she said on the side-lines of a recent event in Kampala.

“As UCC we seek to have choice provided to consumers so that a customer is able to choose a provider and services they wish to have. By Africell coming out of that equation, we have one (service provider) less.”

She said the new exit means that there is going to be disruption on the side of customers who had subscribed and committed themselves to Africell.

She, however, said the door is still open to new operators in the country’s telecom sector.

Africell, which has been in operation for seven years, said stiff competition had made it difficult to achieve its business objectives, hence the decision to quit effective Oct.07.

“In Uganda – a country with a mature and competitive telecom sector – we believe that the opportunity to achieve this impact is increasingly limited. We have therefore taken the difficult decision to permanently end Africell’s operations in Uganda,” the company said in a statement.

Africell’s exit follows several exits in the past years. Smart Telecom, owned and operated by Industrial Promotion Services, a subsidiary of the Aga Khan Fund for Development, closed its operations two months ago. It had been in operation since 2014.

In 2018, two players – Afrimax closed shop while the Buganda Kingdom owned K2 went under and transferred its services to Airtel.

Earlier, Warid telecom had too been swallowed by Airtel after failing to withstand competition.

Latest data from UCC shows that the number of subscribers have since increased from 27.7million in the Q4 of 2020 to 28.3 million subscribers as at the end of Q1 of 2021, shared among five telecom firms – MTN, Airtel, Africell, lycamobile and UTL.

Off these, MTN has 15million customers, Airtel has 10million and Africell with about 1.2million subscribers. The remaining balance is shared between lycamobile and UTL.

Natural selection

“What has happened to Africell and the rest is related to natural selection; nature has played its role,” Lakuma said, adding that the country’s telecom market will still accommodate more telecoms when the number of middle-class increases and peoples’ disposable income improves.

For now, he said, the government can think of relaxing taxes including the newly imposed 12% internet tax that impede the uptake of telecommunication services.

Airtel lures Africell customers

Meanwhile, Airtel is courting Africell customers onto its network giving them a chance to get their preferred number and enjoy 50% data bonus on Airtel until mid-next month.

Its Chief Commercial Officer, Amit Kapur, said for continuity and a seamless transition, they are welcoming former Africell customers with exciting offers.

“The former Africell customers will be connected onto the quality services offered by Airtel Uganda across the country guaranteeing them wide coverage, high speed internet, 3G/4G network, affordable Airtel Money services, affordable packages, roaming and international services as well as all value-added services,” he said.

Kapur said, they have tailor-made offers for corporate businesses/SMEs who have been provided with a dedicated line that they can call to discuss their business needs with their team of account managers who will provide all the necessary guidance and support to ease them on-boarding process.

In terms of quality of service, Kapur said, Airtel Uganda currently boasts of over 2,200 mast sites and over 3,900 kilometers of fiber covering 95.9% of Uganda’s population, making it possible for subscribers around the country to enjoy an improved experience in internet-based activities among other services.

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