MTN says Uganda needs fewer players
Oct 10, 2010
UGANDA'S telecoms industry needs about half the current number of players for the sector to grow, become more efficient and for business to be sustainable, MTN Uganda’s top executive said on Friday.
UGANDA'S telecoms industry needs about half the current number of players for the sector to grow, become more efficient and for business to be sustainable, MTN Uganda’s top executive said on Friday.
The company, a subsidiary of South Africa’s MTN Group, has a subscriber base of 6.2 million active SIM cards compared with 5.2 million last year and controls about 55% of the market.
“The state of equilibrium could be around three operators running effectively and competing effectively in the marketplace to help grow the economy of Uganda,†Themba Khumalo told Reuters in an interview.
In September last year, the company said its average revenue per user (ARPU) had declined to $6 for the quarter ended that month compared with an average of $8 and $10 for 2008 and 2007.
Khumalo said the industry was also moving into a consolidation phase of mergers and acquisitions and that MTN Uganda would consider absorbing competitors to expand if opportunities arose.
Uganda has six main telecom operators including Zain, owned by India’s Bharti Airtel and Orange, owned by France Telecom.
Given Uganda’s population of 31 million, half of whom are under 15, the number of operators was more on the high end, Khumalo said.
“I would not be surprised to see a lot more consolidation going forward, mergers and acquisitions taking place in this country,†he said.
“What happens in the future, can we take over some operations? If an opportunity arises that is attractive and can help us grow and become stronger, I am sure we’ll look at it positively.â€
Telecommunications is one of the fastest growing sectors in the east African country’s economy and the industry regulator, Uganda Communications Commission, estimates the industry’s annual revenues will grow by 25 to 30% over the next five years, propelled by expansion of data services.
Last year the industry grossed $640m from 2006’s $340m. Competition in the industry has increased in the last two years with new players, including Warid Uganda, owned by India’s Essar Group, injecting more dynamism to the market.
MTN Uganda invested a total of $125m in technology and infrastructure upgrades in 2009 and as is spending a further $110m this year, Khumalo said.
Over the next five years, according to Khumalo, MTN will bank on expanding its 3G broadband network and increasing growth in its data business segment as a beachhead from which to counter competition.
The company, a subsidiary of South Africa’s MTN Group, has a subscriber base of 6.2 million active SIM cards compared with 5.2 million last year and controls about 55% of the market.
“The state of equilibrium could be around three operators running effectively and competing effectively in the marketplace to help grow the economy of Uganda,†Themba Khumalo told Reuters in an interview.
In September last year, the company said its average revenue per user (ARPU) had declined to $6 for the quarter ended that month compared with an average of $8 and $10 for 2008 and 2007.
Khumalo said the industry was also moving into a consolidation phase of mergers and acquisitions and that MTN Uganda would consider absorbing competitors to expand if opportunities arose.
Uganda has six main telecom operators including Zain, owned by India’s Bharti Airtel and Orange, owned by France Telecom.
Given Uganda’s population of 31 million, half of whom are under 15, the number of operators was more on the high end, Khumalo said.
“I would not be surprised to see a lot more consolidation going forward, mergers and acquisitions taking place in this country,†he said.
“What happens in the future, can we take over some operations? If an opportunity arises that is attractive and can help us grow and become stronger, I am sure we’ll look at it positively.â€
Telecommunications is one of the fastest growing sectors in the east African country’s economy and the industry regulator, Uganda Communications Commission, estimates the industry’s annual revenues will grow by 25 to 30% over the next five years, propelled by expansion of data services.
Last year the industry grossed $640m from 2006’s $340m. Competition in the industry has increased in the last two years with new players, including Warid Uganda, owned by India’s Essar Group, injecting more dynamism to the market.
MTN Uganda invested a total of $125m in technology and infrastructure upgrades in 2009 and as is spending a further $110m this year, Khumalo said.
Over the next five years, according to Khumalo, MTN will bank on expanding its 3G broadband network and increasing growth in its data business segment as a beachhead from which to counter competition.