Forced partnership: Buganda Katikiiro Charles Peter Mayiga speaks during
a recent media briefing in Kampala. K2, the Buganda Kingdom owned
telecom, was forced into a partnership with Airtel in July last year
after it accumulated debts relating to unpaid taxes and interconnection
fees. FILE PHOTO
Kampala.
Stiff competition across East Africa seems to be “squeezing the juice’
out of the region’s telecom market with operators seeking ways to
increase revenues and appeal to new subscribers.
The market seems to be overly saturated yet every telecom is struggling to impress a small group of subscribers.
Telecom subscriber numbers have been growing rapidly across the region but traditional revenue streams such as voice and short text messaging have been declining yet it is expensive to invest in new streams such as data and mobile money.
The market seems to be overly saturated yet every telecom is struggling to impress a small group of subscribers.
Telecom subscriber numbers have been growing rapidly across the region but traditional revenue streams such as voice and short text messaging have been declining yet it is expensive to invest in new streams such as data and mobile money.
So what would be the likely alternative in such a case? Perhaps mergers or acquisitions or even partnerships.
According to global consultancy firm, McKinsey & Company, regional mobile phone markets, especially in East Africa, are ripe for consolidation as a way of reducing costs, lowering investment requirements as well as allowing weaker firms to survive.
According to global consultancy firm, McKinsey & Company, regional mobile phone markets, especially in East Africa, are ripe for consolidation as a way of reducing costs, lowering investment requirements as well as allowing weaker firms to survive.
“Consolidation and
new types of partnerships are likely but the pace and nature will depend
on regulatory conditions, industry structure and shareholder value,”
the firm says in a market intelligence brief.
In Uganda, the mobile phone market is split among five operators, with MTN being the dominant. It dominates in both voice and money transfer business segments by about or slightly more than 52 per cent.
Other players such as Airtel, which boosts of a 44 per cent market share, according to Uganda Telecommunications Commission, continue to pull in all directions as they bid to join the MTN parade.
In Uganda, the mobile phone market is split among five operators, with MTN being the dominant. It dominates in both voice and money transfer business segments by about or slightly more than 52 per cent.
Other players such as Airtel, which boosts of a 44 per cent market share, according to Uganda Telecommunications Commission, continue to pull in all directions as they bid to join the MTN parade.
Airtel recently
formed a partnership to host K2 on its network, after the Buganda
Kingdom owned telecom found itself in huge debts resulting from tax
obligations and interconnection fees. Others are Utl, which is still
searching for an investor, Africell, formerly Orange and Smile, which
mainly deals in data. Vodafone is already undergoing liquidation.
Some of the above have already lost ground to larger telecoms and analysts predict they could soon be swallowed up as it is increasingly becoming difficult to put up with operational costs.
Analysts argue that the increased competition in Uganda’s telecommunication space coupled with a combination of the inability to raise prices, sets the stage for increased consolidations in the coming years.
Some of the above have already lost ground to larger telecoms and analysts predict they could soon be swallowed up as it is increasingly becoming difficult to put up with operational costs.
Analysts argue that the increased competition in Uganda’s telecommunication space coupled with a combination of the inability to raise prices, sets the stage for increased consolidations in the coming years.
Series of consolidations
Airtel, which has already made a series of consolidations such as acquisition of Warid assets, in 2017 entered an agreement with Millicom to take over Tigo Rwanda, the second biggest operator in the country by market share.
In Kenya, Airtel Kenya and Telkom Kenya in February signed a binding agreement to merge operations, forming a joint venture company - Airtel-Telkom.
Bharti Airtel is also seeking to raise about $1b through an initial public offering on the London Stock Exchange and subsequent listings in Nigeria.
Airtel, which has already made a series of consolidations such as acquisition of Warid assets, in 2017 entered an agreement with Millicom to take over Tigo Rwanda, the second biggest operator in the country by market share.
In Kenya, Airtel Kenya and Telkom Kenya in February signed a binding agreement to merge operations, forming a joint venture company - Airtel-Telkom.
Bharti Airtel is also seeking to raise about $1b through an initial public offering on the London Stock Exchange and subsequent listings in Nigeria.
In a statement
yesterday, Airtel Africa indicated it had already undertaken the process
to list on the London Stock Exchange by submitting a registration
document for approval to the UK Financial Conduct Authority.
A 2017 Swedish Trade and Invest Council report titled ‘Opportunities in the ICT Sector in East Africa’, indicated that revenue from voice continues to shrink, which has forced mobile phone operators to diversify into new revenue streams such as data and mobile money transfer.
A 2017 Swedish Trade and Invest Council report titled ‘Opportunities in the ICT Sector in East Africa’, indicated that revenue from voice continues to shrink, which has forced mobile phone operators to diversify into new revenue streams such as data and mobile money transfer.
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