Counterfeit Crack-down Won’t Stop Mobile Growth

A crackdown in Uganda on counterfeit mobile phones because of safety issues will not slow subscriber growth in the country. Ruhakana Rugunda, Uganda’s Minister of Information and Communications Technology, (ICT) said the clampdown, which will see fake handsets cut off from mobile networks from July 2013, was needed to protect users.

“We have no problems about cleaning our system so we can build our communications system on solid foundations,” Rugunda said. About 30% of the East African country’s estimated 17 million mobile phones are counterfeits, according to study by the Uganda Communications Commission (UCC). Unlike phones from recognised manufacturers, counterfeit phones are not tested to meet safety standards and so could expose users to dangerous levels of radiation as well as battery leaks.

Call quality may also suffer because the handsets are not configured correctly. These fears prompted a region-wide crackdown, the UCC said, with similar initiatives in Burundi, Kenya, Rwanda and Tanzania. Uganda subscribers must register their sim card with the regulator by March 1 next year, which will then pair these with the phones they are used in.

Counterfeit phones will be disconnected between July and December 2013. “Fake phones already in use and/or in the country may not be affected,” said UCC spokesman Isaac Kalembe. “We’ll wait until they die a natural death – a fake phone has a lifespan of about three months.” Counterfeit handsets are cheaper, which is the main attraction for low income users, but Ruganda dismissed fears the clampdown could slow subscriber take-up. “I don’t think it will significantly affect growth because growth is driven by demand to have services. We have about 60% (mobile penetration) now,” said Rugunda.

“This is bound to increase because there’s still a big group in the countryside that has not been connected yet. That’s an important constituency that all telecommunication companies are struggling to reach.”

Background

About 48 percent of the population had mobile phones in 2011, placing Uganda 166th out of 216 countries globally, according to the International Telecommunication Union, with mobile phone penetration rising about 10 percentage points a year since 2009. MTN Uganda, a unit of South Africa’s, is the market leader with an estimated 53 percent share of mobile subscribers. It covers three-quarters of the population while rival operators cover even less.

MTN will spend USD70 million this year to expand its network, said Mazen Mroue, MTN Uganda’s Chief Executive. The company also has a joint venture with American Tower Corp which plans to build tower sites in the country. Rival operator, India’s Bharti Airtel, covers about two-thirds of Uganda’s population and nearly 30 percent of its sites are on shared infrastructure, a spokesman said, but declined to say how many subscribers it has in Uganda. The country’s other mobile operators include Abu Dhabiowned Warid Telecom and France Telecom’s Orange Uganda.