[BLOG] Telecom investments point to a better 2013
The telecom industry has witnessed tremendous growth with the number of mobile phone subscribers, growing year-on-year.
Returns on investments are also good, which explains why the industry is one of the leading tax payers in the country.
However, a few things continue to lack with the absence of proper checks to ensure network quality coming out prominently.
The Uganda Communications Commission (UCC) Quality of Service Survey reports have always indicated that none of the telecoms meets expected benchmarks for both blocked and dropped calls, some of the key measures for network quality.
However, 2012 has seen players try to straighten up things as well as streamlining the industry not only for profitability but quality of services.
Earlier in the year, UCC, in conjunction with the ICT ministry, proposed to subject players with poor network quality to a 10 per cent penalty of their gross income as a means of curbing the increasing deterioration in network quality.
Eng Godfrey Mutabazi, the UCC executive director, recently told Daily Monitor that the regulator was working with the ICT ministry to design penalties for players with poor service quality.
This comes amid growing customer dissatisfaction over falling network service quality by almost all players, including MTN, Airtel, Warid, Orange and Uganda Telecom.
The deterioration in service quality has roots in the cut of voice call rates, which in 2011 dropped from a market average of Shs380 to Shs180 per minute.
The resultant surge strained network quality which resulted into poor network services.
Growth in subscriber numbers outpaced investment in network expansion and upgrades, forcing players to use the compression method – fitting more and more calls on less and less frequencies .
However, at the close of 2012, a number of telecoms have set budgets, which is likely to support the growing subscriber numbers.
MTN’s capital investments for network expansion were for instance estimated to have exceeded Shs183.1 billion in 2012 alone, with about 80 base transmission sites built.
The firm is also expected to add 600km of fibre infrastructure this year, growing its total fibre laid to close to 2,800km by the end of 2013 in a bid to provide capacity for high speed data connectivity and a wider coverage of 3G mobile data services.
MTN also launched a Shs25 billion data and switching centre as well as a MTN business unit in Mutundwe to provide communication solutions for business growth through provision of superior, directly managed services backed by consistent service levels.
Warid Telecom also added 120 new sites on its network in 2012 to improve network quality, according to the telecom’s chief commercial officer, Mr Shailendra Naidu.
Airtel, Orange and Uganda Telecom were also reportedly involved in network expansion during the year.
The sim-card registration exercise which is still ongoing is the other avenue that is focused at improving quality of services.
The move seeks to ensure easy tracking of sim-cards used for illegal activities, curbing phone theft and checking on unsolicited and threatening messages among others.
Data from UCC shows, as of December 2012, only 56 per cent of the 16 million total mobile phone subscribers had registered their sim-cards.
According to UCC, the telecom industry added three million subscribers, driving up the total subscriber base to about 16 million from 12 million in 2012 and 2011, respectively.
MTN, recently said more than 60 per cent of the new additions in 2012 joined the MTN family.
Ms Justina Ntabgoba, of MTN Uganda recently said the telecom had about 7.5 million sim-cards, however, Daily Monitor could not verify whether they are all active .
With the Communications Commission of Kenya switching off sim-cards used in fake mobile handsets it has set the stage for Uganda to move in the same direction.
Uganda’s mobile phone market is threatened by a surge in importation of fake and counterfeit phones.
Eng Mutabazi recently said: “The surge in fake telecommunications devices is a serious concern,” adding ‘the poor quality of services experienced by some subscribers might be a result of the quality of the handsets.
In 2012 telecoms tried to cut costs through outsourcing and leasing of tower site services.
In June, MTN sold approximately 1,000 tower sites for about $175 million to American Tower Corporation (ATC), a United States-based company, as well as sharing infrastructure with other service providers.
Orange and Warid also sold 300 and 394 tower sites, respectively to Eaton Towers.
The cost of running and maintaining a tower site is about 60 or 80 per cent of capital expenditure and about 20 per cent of operating expenses.
Network sharing is thus a new frontier for growth in the industry.
With all the above steps undertaken in 2012 to better service delivery in the sector, both the regulator and players expect to see better prospects in 2013.
By Flavia Nalubega & Faridah Kulabako
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