Low call rates expected to drive Uganda Teledensity by 20%

Wednesday, 6th April, 2011

Uganda Teledensity should grow by between 15-20% or another seven million people should get connected in 2011 if operators drive calling rates further down, Warid’s head of slaes and marketing has advised.

“If you are selling low, you look for value and high margins. If you are selling high, you look for low margins. This is the scale business,” said Shailandra Naidu.

Naidu said the pattern of usage is shifting to young people whose spending power may not be high but who are equally in need of communication. It is reported that in university campuses students use the mobile phones to get updates on lecture sessions that they may have missed.

Naidu said if affordability were to be driven further down, the sector would be looking at doubling penetration in the next two years. Currently, penetration is at about 35%, meaning out of every 100 people, 35 have mobile phones.

“One of the good things with Uganda is it is still a long way before we look at saturation,” said Naidu.

There has been an almost 60% drop in call rates in under one year as the sector witnessed massive tariff changes. But going forward, Naidu believes two things will continue to the impact on teledensity.

One will be the cost of owning a mobile phone and the second factor will be the cost of staying mobile. Both factors of course will also be driven by the availability of disposable cash in the hands of the public

Major changes in tariffs structures were mainly sparked off by innovative products that catered for all categories of phone users.

This continued to be reflected in early 2011 as Airtel Uganda announced standard call rates to the rest of East Africa as well as to selected Asian states like India and China.

While not commenting on the reported exit of Essar, a firm that has a major stake in Warid., Naidu said it is unlikely that Warid will exit because the nature of telecoms is that either firms merge or are acquired but they do not just exit the market.

Warid built another 33 sites in Kampala alone in January 2011 as its operation quality dropped due to increasing traffic on its network. Warid is also planning to build additional layers on the existing networks to increase reception capacity because there is not enough space to build new masts.

By David Mugabe: The New Vision Newspaper