Friday , March 29 2024
Home / ARTICLES 2008-2015 / Ugandans spend less on MTN calls as competition bites

Ugandans spend less on MTN calls as competition bites

By Independent Team

MTN’s Average Revenue per User (ARPU) which describes how much money each subscriber spends on average on the network has declined, according to its latest figures.

Following on a pattern set in the past, Ugandans have continued to spend less on phone calls as they make shorter and shorter calls and competition forces telephone companies to cut the cost of calls.

On average, each MTN caller spent US$6 (Approx. Shs 11,000) on calls in the September Quarter compared to US$7 (Approx. Shs 13,000) which is a 9% drop in revenue contribution to the group. Ugandans were spending up to US$8 on MTN calls in 2008 and US$10 in 2007.

In 2002, MTN’s ARPU in Uganda was US$30.

MTN expects more customer growth in the last quarter of the financial year, according to its chief executive.

“As I speak we’ve just gone over the 5 million mark and we are projecting some growth towards the end of the financial year … probably close on 5.4 million subscribers,” Themba Khumalo told Reuters on the sidelines of an African telecoms conference last week.

Numbers for Quarter 3 ending September 30 indicate that MTN Uganda’s subscriber base rose by 10.5%. That is an impressive growth compared with overall figures for the same South and East Africa (SAE) region of the parent MTN Group that also has South Africa. It grew at only 0.5%, the lowest for all regions.

The West and Central Africa (WECA) region grew by 5% and the Middle East and North Africa (MENA) 5.1%.

MTN Uganda, however, had the third highest growth in its region after Rwanda which grew at a whopping 19.8% and Zambia at 10.8%. The SEA region also includes Botswana and Swaziland.

In actual numbers, MTN Uganda subscribers increased by 460 over the three months to 5 million, Rwanda by 264 to 1.7 subscribers, and Zambia by 92 to 949,000 subscribers. South Africa performed worst. It lost 812 subscribers to end the quarter at about 17 million subscribers.

In money terms, however, South Africa still provided the biggest contribution to the company kitty for the SEA region at 65%. Uganda contributed 19%, Rwanda 6% and Zambia 4%.

Rwanda revenues also declined by 3% and South Africa, where the ARPU is highest for the region at about US$18, registered a 1% increase in revenue contribution despite the decline in subscribers.

Uganda increased its subscriber base by 11% in the quarter following the continued success of MTN Zone which now constitutes 95% of the total prepaid base.

Introduced in mid-last year, MTN Zone offers customers up to 99% savings on intra-network calls depending on where and when they make calls.

The percentage discount is shown constantly on the customer handsets. In money terms, the discounts may cause the tariff to drop to Shs1 for a call that could have cost up to Shs320 without the discount.

MTN Zone was an innovation by the company to cope with a price war that resulted from the entry of Warid in early 2008. MTN, Zain, and UTL who were the top operators even then, became involved in expensive network upgrades and costly promotions that include lower tariff rates or free calls.

The entry of Orange and i-Tel has made competition even stiffer and contribute to a decline of market share for MTN, according to recently published independent research that puts it at around 40%. MTN maintains it up to 60% of market share according to its latest figures.

Khumalo reportedly told Reuters in South Africa that the new submarine cables could have a positive impact on tariffs in Uganda, following a 9% hike on base tariffs this year by MTN.

Cables such as the $650 million SEACOM undersea fibre-optic cable improve international connectivity and lower costs.

“We see some positive signals that there will probably be some adjustments downwards to obviously take advantage of the lower cost of international connectivity,” he said, adding MTN would like to extend that to international calls as soon as possible.

Khumalo said MTN, which spent over $300 million in Uganda in past two years, was eager to double revenues from its data business by 2010 and was putting more emphasis on this.

 

Leave a Reply

Your email address will not be published. Required fields are marked *