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The East African : November 25th 2013
MID-INCOME STATUS? An underperforming economy puts Kenya at risk of failing to meet its goal. Page 38 BUSINESS NOVEMBER 23-29,2013 NON-VOICE INCOME By BERNA NAMATA The East African R wanda’s telecom firms are stepping up investment in data services to reduce their reliance on the voice market, as competition in the sector heats up in the wake of increased uptake of the Internet. Over the past two months, the country’s three telecom companies — MTN Rwanda, Tigo Rwanda and Airtel Rwanda — have all rolled out promotions aimed at increasing data penetration, a move that is expected to reduce the cost of Internet use. They have also lined up new investments in the data segment hoping to ride on the growing use of smartphones to access the Internet. Global telecom industry body GSM Association says in its latest report that Africa is the fastest growing market for smartphones in the world, with East African countries topping the list of nations where the devices are increasingly gaining a foothold. Industry data package charges per day on Internet modems in Rwanda have dropped to an average of between Rwf500 ($0.744) and Rwf800 ($1.19) from Rwf1,000 ($1.4), while weekly charges have dropped to Rwf 4,500 ($6.7) from Rwf 6,000($8.9), and monthly charges stand at Rwf18,000 ($26.7) from Rwf 30,000 (Rwf44.6) a year ago. Rwanda’s Internet penetration is currently estimated at 12.2 per cent, representing an increase of 27 per cent as of June this year, mainly driven by mobile data. However, the country lags behind its counterparts in the East African region apart from Burundi, which has an Internet penetration rate of 3.9 per cent. Kenya leads at approximately 41.1 per cent, Uganda’s stands at 17 per cent while Tanzania’s is 14 per cent. Telcos across the region have been banking on non-voice segments such as mobile money transfer and data to drive growth. Two weeks ago, Kenyan mobile operator Safaricom declared a Ksh11.2 billion ($130.2 million) net income for the six months to September, riding on higher incomes from the non-voice segment. Mobile data revenue grew by 43 per cent to Ksh4.3 billion ($50 million). While industry players maintain that Rwanda’s mobile Operators are counting on a rise in mobile subscriptions to grow their market share of data penetration.” penetration at 60 per cent is still low, giving room for more competition for voice, the data segment is an avenue to drive revenue. Operators are counting on a rise in mobile subscriptions, currently estimated at 60. 9 per cent, to grow their market share of data penetration. “In this country, any new operator will have numbers because people have double sim cards. There is still room to grow voice, which is the entry point before getting to data,” said Ebenezer Asante, MTN Rwanda’s chief executive officer. “A significant chunk of revenue is coming from voice but in terms of year-to-year growth, Rwanda’s telcos eye data segment to boost revenue MTN, Tigo and Ai≥tel Rwanda have lined up p≥omotions and new investments to att≥act custome≥s and boost Inte≥net use 60. 9 pc Current estimated mobile subscription rate in Rwanda, which operators are hoping will grow and in turn increase data penetration. MANAGER The art of decision-making: How to get it right. Page 40 35 Telecommunications Company Ltd (TTCL) to supply 1.255 Gigabits per second of Internet bandwidth over the next 10 years to increase Internet connectivity speeds, the extra bandwidth has yet to reduce the cost of Internet use. The additional bandwidth is expected to double Rwanda’s international bandwidth capacity, which is currently estimated in the range of 1.1 -1.2 gigabits per second. “This excess bulk capacity) has not been reflected in their prices. We are talking to them to make sure it is enforced,” Mr Gatarayiha said, adding that the government will supply ISPs with excess bulk capacity which is sold at a lower price. However, penetration is still limited by the cost of Internet use and smartphones. The current average cost of Internet is Rwf30 ($0.044 cents) per megabyte, while the cheapest smartphone costs Rwf35000 ($52). The government is now banking on its recent deal with South Korea’s telecommunications giant — KT Corporation to roll out the 4G facilitate lower the cost of access. The $140 million deal that will WHO RULES THE MARKET? Telecom companies in Rwanda are increasingly investing more in data infrastructure to grow their market share. MOBILE INTERNET: As of June, Tigo Rwanda dominated at 44 per cent, followed by MTN Rwanda at 40 per cent while Airtel had 16 per cent. SUBSCRIBER BASE: MTN Rwanda had a subscriber we see more occurring in mobile money, data and value added services.” MTN Rwanda slashed its data charges by half last year, with the cost of a 250MB package reducing to Rwf3,000($4.46) from Rwf6,000($8.92) while prices on its 5 GB bundle were reduced to Rwf 15,000($22.3) from Rwf30,000 ($44.6), 500Mb to Rwf 5,000 ($7.4) from Rwf 10,000 ($14.8) respectively. Data solutions “We are focusing on data solutions for customers because we believe we can be market leaders,” said John Magara, the public relations officer of Airtel Rwanda. base of 3.6 million; Tigo Rwanda Ltd has two million while Airtel 973,000 subscribers as per September statistics. DATA CHARGES: Airtel Rwanda has the lowest charge of mobile data per megabyte at Rwf 20($0.02); MTN Rwanda charges Rwf 30 ($0.04) while Tigo Rwanda charges Rwf50 ($0.07). see the Korean telcom roll out 4G –LTE countrywide is expected to increase retail access to mobile network operators and Internetservice providers. Like Kenya’s proposed LTE network, it will be a wholesale network that will be shared by the country’s three mobile operators. “We hope that by the time that network is completed, in three years time we shall have 90 per cent geographical coverage of LTE, which is going to help reach many people across the country,” Mr Gatarayiha said. Liquid Telecom Rwanda, a The Rwanda Utilities Regulatory Agency (Rura) says telecom companies are increasingly investing in data infrastructure. “Data is growing fast and we are seeing all operators investing more in it. For instance, MTN Rwanda changed its strategy and put in more infrastructure for data,” said Regis Gatarayiha, the director-general of Rura. Mr Gatarayiha said the cost of Internet use is still relatively high on average, though the government is negotiating with Internet service providers to lower their charges. While last year the government signed a $6.7 million contract with Tanzania subsidiary of Econet Wireless Global Ltd headquartered in South Africa which took over the assets of Rwandatel in June this year is also targeting to grow its broadband market. “Our priority is to quickly rehabilitate Rwandatel’s core network and to build the access network in order to boost service delivery,” said Sam Nkusi, the chairman of Liquid Telecom Rwanda. In January, Liquid Telecom announced that it had acquired the East African telecom assets of Altech Group giving the latter an 8.6 per cent minority stake in Liquid Telecom in a deal in which Altech would also pay $16.5 million in cash.
November 18th 2013
December 2nd 2013