REVEALED! Cheap internet data cost Africell business in Uganda- MTN boss

By Prisca Wanyenya

The Chief Executive Officer of MTN Uganda, Wim Vanhelleputte has warned that calls for telecoms to reduce cost of data should be accompanied by policies on cost of doing business, or else suffer a similar fate as Africell. Vanhelleputte made the call while appearing before Parliament’s Information, Communication and Technology Committee that is scrutinising a motion on the poor service delivery among telecom operators in Uganda. While responding to allegations of exorbitant costs of internet data, Vanhelleputte said the internet costs are a reflection of the costs the telecoms incur in providing data, and any telecoms that have attempted to sell data below their costs of operation have ended up closing their businesses.

“We have to be careful not to systematically sell data below cost. The reason why Africell had to close shop is systematically selling data below the cost. I wish I could do that, Examples of the companies that have done that, one that is fresh is Africell. The reason they were selling data below cost. I wish I could sell data at a lower rate. If you sell goods below the cost, you can do it for a short term, but for a long term, you close shop and that is what happened to Africell and all the operators, they were selling data below the cost,” he explained.

It should be recalled that in October 2021, Africell closed business in Uganda, having entered the competitive telecom sector in 2014 through the acquisition of Orange’s operations in the country.

During the interface, MTN Uganda also defended itself against allegations of charging customers exorbitant fees while transacting on mobile money, saying over half of the transaction fees goes towards payment of commission to the mobile money agents.

Vanhelleputte said: “More than half of the fees you pay goes to the mobile money agents. MTN just in November last year, we paid Shs17Bn to 160,000 agents. Airtel I think paid Shs12Bn, I think both of us paid Shs30Bn in November in commission to about 200,000 individuals. Yes, I can reduce the cost of cash outs, but then again, I have to reduce the cost of withdrawal. So when you go to withdraw, you are paying their salary.”

In the 2021 Annual report for Bank of Uganda the value of Mobile Money transactions increased by 42.26 percent to Shs113.38Trn from Shs 79.7 Trn, while the volume of transactions increased by Shs730M to Shs3.89Bn. The upward trend was attributed to the increased usage of the mobile money digital platform to mitigate the COVID19 risks associated with handling paper money.

Bank of Uganda also revealed that the number of active mobile money users increased to 21.18 million during the year under review when compared to 17.5 million recorded during the year 2020.

Charity Bainababo, UPDF Representative tasked the telecoms to explain circumstances under which sim cards end up in hands of criminals, to which Vanhelleputte said the Telecoms have followed all guideline but some customers take advantage of the provision that allows each NIN to register three sim cards to give out other sim cards and there are also cases of phone theft that see customers lose cards to criminals.

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