Uganda’s call rates go up as industry consolidates

NWSC managing director Silver Mugisha (gesturing) talks to his staff in Mbarara recently. He said the corporation has partnered with LCs so that people can relate with their
programmes. FILE PHOTO 

By DICTA ASIIMWE Special Correspondent

In Summary

• A fortnight ago, market leader MTN Uganda raised its voice and data tariffs by 12.5 and 20 per cent respectively, in a move that company officials said was in response to changes in the operating environment.
• MTN’s competitors, working to build their customer number, said they were not considering a tariff adjustment for now.
• Insiders at MTN claim their competitors will pay a heavy price if they don’t adjust their tariffs because revenues are below the cost of production.

Calling rates have started rising in Uganda as the effects of the Airtel-Warid merger earlier this year begin to take effect.

A fortnight ago, market leader MTN Uganda raised its voice and data tariffs by 12.5 and 20 per cent respectively, in a move that company officials said was in response to changes in the operating environment.

However, MTN’s move was not immediately reciprocated, even by its nearest competitor, suggesting that the market leader could be exploiting a competition vacuum created by the merger.

In the less than six months since the merger, MTN has increased its tariff line three times, the latest being on October 10, when the company attributed its actions to a drop in the Ugandan shilling against hard currencies.

READ: Uganda’s new tax will raise calling rates, hurt integration

However, according to the Bank of Uganda’s monetary policy statement for August, the shilling’s depreciation against the dollar was just 0.8 per cent.

MTN’s competitors, working to build their customer number, said they were not considering a tariff adjustment for now.

“We are not increasing our tariffs as we are now focused on becoming the most loved brand in Uganda.

We are ensuring that we meet the customer’s needs first,” said Pheona Wall, the spokesperson at Airtel Uganda. Airtel, which acquired rival Warid last February to reach a combined subscriber base of 7.2 million, is hoping to raise shareholder value without triggering desertion by the price-sensitive segment of its subscribers.

In Kenya, two telcos — Safaricom and Airtel — have over the past two weeks raised their call costs to Rwanda, Burundi, Uganda and Tanzania, citing new taxes imposed by the East African states during 2013/2014 budget. Subscribers will now pay Ksh25 ($0.29) to make international calls to all networks in the four countries.

Previously, calling Uganda and Burundi cost Ksh18 ($0.21), while calls to Tanzania cost Ksh25 ($.29).

In October, Safaricom wrote to the Ministry of East African Affairs saying new taxes imposed by Rwanda, Burundi, Uganda and Tanzania would pose a barrier to trade in the region.

READ: Kenya telcos in protest over new EAC call taxes

Meanwhile, in Uganda, Orange, which had 0.8 million subscribers at the end of 2012, is getting most of its money from data, finding no reason to increase the voice segment tariffs.

However, insiders at MTN claim their competitors will pay a heavy price if they don’t adjust their tariffs because revenues are below the cost of production.