Xalam Analytics: Fixing Rwanda’s Ailing 4G Wholesale Model
Rwanda’s 4G wholesale model seemed like a good idea when it was first conceived. But it hasn’t been working, and should be scrapped.
In 2013, the Government of Rwanda (GoR) set up a joint venture, Olleh Rwanda Networks with South Korea’s KT Corp, to roll out a 4G network that would cover 95% of the country. KT Corp pledged to invest $140m in the project; for its equity stake, the GoR contributed its (then-)newly built country-wide fibre infrastructure, 4G spectrum and a wholesale-only operator licence. The new venture was allocated spectrum in the 800MHz and 1800MHz bands, and critically, a 25-year exclusivity to operate a 4G network.
Under the set-up, Olleh Rwanda Networks (which later rebranded to KT Rwanda Networks) builds and operates the country’s wholesale 4G network and resells data to retailers including the country’s mobile network operators.
At the time, the GoR had a defensible rationale for opting for this approach. It had a 3500 km fibre network lying fallow and largely unused; as a regional technology pioneer, Rwanda wanted to move fast on 4G deployment. The country’s three mobile operators, which were just starting to push 3G services (and with at least two of them still unprofitable), showed little inclination to aggressively roll out 4G networks. In addition, the likelihood of attracting a new, 4G player without significant incentive was close to nil.
4G is here, but nobody’s using it
Four years on, has the model worked? Using market data and comparing against a sample of 20 other African markets, we assessed Rwanda’s 4G performance across three main dimensions: coverage, adoption, and pricing.