2010 Uganda - Telecoms, Mobile, Broadband and Forecasts

Fibre, mobile broadband and mobile banking are revolutionising Uganda’s telecom sector

Uganda is one of the fastest and most consistently growing economies in Africa. The introduction of mobile telephony has revolutionised its telecommunications sector since Celtel (now Zain/Bharti) launched the first network in 1995, followed by MTN in 1998, Uganda Telecom in 2001, Warid Telecom in 2008 and HiTS Telecom, in which France Telecom’s mobile unit Orange bought a majority stake in 2009. The intensified competition has led to a price war which has accelerated subscriber growth but also the fall of average revenue per user (ARPU). However, with market penetration still well below the African average, hundreds of millions of US dollars are being invested into new infrastructure. At the same time, the operators are trying to find ways of generating additional revenue streams. Mobile data and 3G 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 bank accounts.

A simplified and converged licensing regime has significantly reduced barriers to market entry and increased competition. MTN also competes with Uganda Telecom in the fixed-line market. Penetration is low in this sector but has seen a renaissance recently on the back of wireless local loop (WLL) network rollouts, prepaid services and an increasing demand for broadband access. 3% of fixed lines are using fibre for the last mile.

Being landlocked, the country depended entirely on satellites for its international Internet connectivity until 2009 when several international submarine fibre optic cables landed on the African east coast, to which Uganda is now connected via a national fibre backbone extending to its borders. By 2010, prices for international bandwidth had plummeted to a fraction of their original cost. In parallel, wireless technologies such as WiMAX and 3G mobile services have brought the Internet within reach of a much wider part of the population than the limited fixed-line DSL services ever have. These improvements in infrastructure will revolutionise the market by making broadband access more affordable and enabling converged voice, data and video/entertainment services.

Revenues in Uganda’s telecom sector reached UGS1.2 trillion (US$560 million) in 2009, generating tax revenues of UGS183 billion. With GDP growth forecast to remain in the range between 6 and 8% per annum until at least 2015, growth prospects for the sector are excellent.

Market highlights:

• Forecasts for Uganda’s mobile, fixed-line and Internet markets;
• Profiles of major players in all market sectors;
• Mergers & Acquisitions in the mobile sector;
• Arrival of international fibre bandwidth has revolutionised the broadband market;
• Pricing of international fibre capacity vs. satellite and its effect on retail pricing;
• National fibre backbone rollout;
• Two additional 3G mobile network launches;
• Two new WiMAX operators;
• Expansion of services to rural areas through rural development fund;
• Smart Grid project;
• 3% of fixed lines use fibre for the last mile;
• Overview of all mobile money transfer services.

Estimated market penetration rates in Uganda’s telecoms sector – end-2010

(Source: BuddeComm based on various sources)

For those needing high level strategic information and objective analysis on the telecommunications sector in Uganda, this report is essential reading and gives further information on:

• One of the most competitive mobile markets in the region;
• International, national and last-mile fibre developments;
• Government policies affecting the telecoms industry;
• Market liberalisation and regulatory issues;
• Telecoms operators – privatisation, acquisitions, new licences;
• Internet and broadband development and growth;
• WiMAX and 3G mobile broadband rollouts and pricing;
• Average Revenue per User (ARPU);
• The rapid growth of mobile money transfer and m-banking services.

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