2013 Uganda - Telecoms, Mobile, Broadband and Forecasts

Consolidation in overcrowded mobile sector, Internet growing at more than 200% per year

Uganda is one of the fastest and most consistently growing economies in Africa. The introduction of mobile telephony has revolutionised the country’s telecommunications industry, but with eight networks the market is now considered overcrowded. This had led to consolidation among the operators, culminating in the takeover of Warid Telecom by Bharti Airtel in 2013. Other players include regional heavyweights MTN from South Africa and France Telecom/Orange.

The intensified competition led to a price war which has accelerated subscriber growth but also reduced the average revenue per user (ARPU) and quality of service (QoS). The network operators started raising their tariffs again and are trying to find ways of generating additional revenue streams. 3G and 4G mobile broadband services as well as mobile money transfer and m-banking services are at the forefront of this development in a country where less than 20% of the population currently has internet access or holds a traditional bank account.

Fixed-line and DSL penetration is low but saw a renaissance recently on the back of wireless local loop (WLL) rollouts, prepaid services and an increasing demand for broadband access. Fixed GSM and WiMAX in combination with VoIP now make up more than half of the fixed telephony market.

Being landlocked, the country depended entirely on satellites for its international connectivity until 2009 when several international submarine fibre optic cables landed on the African east coast. Uganda is now connected via a national fibre backbone extending to its borders with neighbouring coastal countries. By 2013, prices for international bandwidth had fallen to a fraction of their original cost, but retail pricing of broadband services is still relatively expensive, especially when considering purchasing power parity. However, wireless and mobile technologies such as WiMAX, EV-DO, HSPA and LTE are now putting the internet within reach of a much wider part of the population than traditional fixed-line DSL services have in the past. These improvements in infrastructure are revolutionising the market and enabling converged voice, data and digital media services.

At around 50%, total teledensity is still below the African average, and all market segments are experiencing strong growth. A simplified and converged licensing regime has significantly reduced barriers to market entry and increased competition. With annual GDP growth forecast to rise from currently 4% to 7% in 2015 and the following years, growth prospects for Uganda’s telecoms sector are excellent.

Market highlights:

• Consolidation in the overcrowded mobile sector;
• Opportunities for MVNOs and tower outsourcing companies;
• Three 4G (LTE) networks launched;
• Internet subscriptions growing at more than 200% per year;
• More than 95% of internet connections are mobile;
• 3G mobile broadband pricing varies widely, consolidation expected;
• New legislation and regulations;
• WiMAX/VoIP provides more than 10% of fixed telephone connections;
• Fibre optic network rollouts continue;
• New fibre links to international submarine cables.

Estimated market penetration rates in Uganda’s telecoms sector – end-2013

(Source: BuddeComm based on various sources)

Data in this report is the latest available at the time of preparation and may not be for the current year