Telecoms in Uganda Battle to Provide Data

Kampala, Uganda. Increased demand for internet connectivity is leading telecom companies to intensify the battle for customers.

Initially telecoms were going neck-to-neck for provision of voice services with only MTN, Orange and UTL, taking on internet services. However in less than six months, Warid and Airtel have jumped into the fray to provide data services, taking the battle to an all new level. More recently, Warid has now advertised that it will be providing much faster Internet known as 3.75G. Currently, MTN and Orange provide 3G+, which is also fast internet, but slower than what Warid is promising.

Growth of mobile handsets

There is a growth in mobile handsets that can access the internet, which the telecoms want to capitalise on. Statistics from the ITU, indicate that about 70% of all internet in Uganda is accessed through mobile handsets.

Brands like Huawei, Nokia, Samsung, Apple and HTC, are increasingly making handsets that are compatible to the internet. These products are saturated in the market at the moment, with some being low-end and others high-end, however both almost serve the same purpose depending to the consumer needs.

MTN, Orange and UTL are dominant to this level because over the last four years they have added this to the core of their operations.

They have also been partly responsible for making internet enabled handsets affordable, by subsidising on some of the prices, to boost the reach. Warid and Airtel have mostly been marketing some handsets that are not internet enabled.

This explains the aggressive nature of Warid's internet campaign as it seeks to eat into the market dominated by Orange and MTN. Some other mobile devices in the market are known as modems, which are portable and can be used in a laptop and PC.

The modems have become a must have tool however customers are now becoming more and more spoilt for choice on which service provider to use.

Affordable

There has been a downward trend in the prices of the internet since the landing of the SEACOM, TEAMs and EAssy cables at the coast of Mombasa.

The landing of the cable has made the internet affordable to the Ugandans and brought in more players into the market to provide a cheaper service. Orange in particular has made the internet as part of its core business after the 2009 price wars led them to adjust and concentrate on data.

Orange has been giving away bonus Megabytes to anyone who buys an internet bundle. Orange went ahead to introduce high speed internet of 21 megabytes per second (mbps), the fastest internet on the market so far, as the telecom moved to protect its turf as a leading data provider.

MTN Uganda which has about 7million subscribers has also continued to intensify its marketing and provision for cheap internet and at one point was giving 10MB free to its subscribers.

MTN has also been running a promotion where customers have the opportunity to watch Manchester United play a live game if they subscribed for an internet bundle.

"We still have the capacity to grow and expand our data for this year and beyond," said the Themba Khumalo, the former MTN Uganda CEO. UTL on the other hand has stagnated compared to the competition. Warid is becoming more and more aggressive with affordable internet including bundles for as low as Shs500. Airtel has also come up with a package that allows the customer to subscribe for voice and data at once at much lower rates.

Reliability issues

The telecom companies still have to deal with issues of reliability and reach. Almost two months ago, the cables in Mombasa were hit by ship anchor, which led to unreliable internet for the two weeks.

This paralysed some businesses that relied on the internet, something Ugandans had not anticipated. This breakdown means that the service providers will need to subscribe to more than one cable and also keep their satellites running just in-case such a situation happens.

"We will soon be linked to a fourth cable in order to hedge ourselves from the internet inconveniences we had recently," said Philipe Luxcey, the CEO Orange Telecom Uganda.

Some telecoms have however continued to have a break down in data services that are not related to the fibre optic. MTN and UTL have been the culprits in this category.

Data services are also limited to urban areas with most of advertising not indicating where the service reaches.

For instance when Warid advertises 3.75G, it doesn't indicate that this internet is only accessible in Kampala. Some towns in Uganda also only run on weak internet which means that the telecoms still have a long way to go.

BY FRANK AHUMUZA
East Africa Business Week
29 APRIL 2012