By our reporter
Telecommunications companies have reported that their operations over the last six months have been affected by what they call a difficult macroeconomic environment, characterized by the skyrocketing cost of living and foreign exchange rate.
According to the Uganda Bureau of Statistics, the inflation rate rose for the eight consecutive months at the end of July, going to 7.9 percent for the end July 2022, from 6.8 percent in the period ended June 2022. This is the highest rate recorded since December 2015.
This has largely been influenced by higher fuel prices, rising domestic food crop due to dry weather conditions across the country, as well as persistent production and supply chain challenges.
“The combination of these factors has had a significant impact in the spending power of our customers in the period under review,” said the outgoing MTN Uganda Chief Executive Officer, Wim Vanhelleputte adding that this affected the demand for services and maintenance of the products they were running.
Despite this however, MTN’s profit after tax grew by almost half to 193.6 billion shillings, enabling it to declare an interim dividend of 5 shillings per share. If approved by the shareholders, 111 billion shillings in total will be paid out to the shareholders.
As the COVID-19 pandemic effects lagged on longer than expected, the service providers sought strategies that would ensure they maintained their customers, without heavily impacting their revenues.
MTN’s Ambition 2025 is a group-wide strategy, which involves funding its network expansion and improvement, accelerated through selective partnerships and taking advantage of the “MTN brand” as the most trusted and valued in Africa. It is supported and funded through enhanced cost and capital expenditure efficiencies.
MTN Group is considering consolidating its infrastructure assets and platforms such as financial technology, fibre and data centres, among others, to build value and attract third-party capital and partnerships into these businesses over the medium-term across the 14 subsidiaries.
“Our investment and continued execution of our commercial strategy has enabled us to increase MTN Uganda subscriber base by almost 9 percent to 16.3 million, while our active data subscriber base grew by 21.8% to 5.7 million,” the CEO said.
MTN says it will continue partnering with financial technology companies to reach out to people who cannot afford the traditional financial system, to access services like micro insurance, online savings and others.
Airtel Africa on its part, has no aggregated figures for individual subsidiaries but says total revenues by 13 percent 1.2 billion dollars, due to a strong performance in the voice, data and mobile money segments. The business operations in East Arica posted the highest growth rates of 28 percent, according to Airtel Africa Segun Ogunsanya.
Airtel Uganda Marketing Manager Henry Njoroge says they are constantly looking for innovations that make their services more affordable so that their customers stay connected.
“In addition, we are bringing 88% more data to our customers who purchase daily 24hour validity bundles. We recognize that most of our people earn a daily income. We are intentional in ensuring that this group of our customers are supported with affordable data to make their business communication. This is the glue that binds Uganda’s small and micro enterprises,” he says and added: “Within our platforms, we grew Finfech subscribers by 14.1% to 9.8 million as we executed on our sealed objective to deepen Financial inclusion.
In line with our strategic priority to also accelerate advanced services in Fintech, MTN Uganda has partnered with Jumo to offer micro loans on mobile money through our MoSente product. This is in addition to the MoKash savings and micro lending product and the MoMo Advanced which offers overdraft services, both in partnership with NCBA Bank.”
UGANDANS NOT HAPPY
Amidst all this, Ugandans feel these telecoms can do more than deploying their PR machinery and CSRs as they swim in profits. Members of Parliament have urged them to adopt more friendly data and voice bundles.
This, according to the MPs, is intended to ensure that consumers of communication services get quality, reliable and affordable communication services to widen Information Communication Technology (ICT) penetration as a key driver of economic growth.
While chairing the House on Wednesday, 13 July 2022, Deputy Speaker Thomas Tayebwa tasked the Uganda Communication Commission (UCC), the national regulatory body of the communications sector to engage these companies to exclusively provide unlimited data and voice call bundles that do not expire.
“This issue of expiry of data and voice bundles needs to be addressed. How do you tell me that bundles have expired? Technology has no expiry date. In many countries, one is only required to reactivate the bundle; it’s like money on your account where the bank tells you that your account has become dormant, it is then reactivated and you can access your money,” Tayebwa said.
He also urged UCC to direct telecom service providers to remove interconnection fees that have created unhealthy monopolistic tendencies, making it costly for subscribers to make calls across other networks.
Ugandans continue to pay heavily in their bid to access telecommunication services characterised by dropped calls, exorbitant rates on data bundles, unrealistic consumption patterns and expiry of internet bundles among others.
There are also issues to do with cyber security where unscrupulous people are swapping customer’s sim cards and using them for fraudulent and heinous acts. Many Ugandans especially MTN subscribers have lost huge sums of money on the hands of these people who collude with insiders.
Poor network especially both in and outside Kampala is also another challenge—both internet and calls. Dropped calls are the order of the day and yet they are charged, a matter minister Frank Tumwebaze has been lamenting about.
Circumstances that also saw outgoing MTN CEO Wim Vanhelleputte and other executives— chief marketing officer, Olivier Prentout, Annie Bilenge Tabura, the general manager for sales and distribution and Elsa Mussolini, the head of the company’s mobile money business—deported made Ugandans lose confidence in the telecom. Ugandans feel something was fishy and is yet to be solved.
Ugandans are also not happy with Airtel’s unfriendly mobile money transactions. For instance it’s easier for MTN line owners to authorize mobile money withdrawals in favor of a recipient who is very far away from them than is the case with Airtel. MTN to Airtel transactions are also cheaper, reliable and efficient than Airtel to MTN.
On top of poor customer service, some Ugandans are also wondering why Airtel is not listed on the Stock Exchange just like MTN.
There has also been the issue of dealing with agents. These are franchise partners involved in facilitating mobile money transactions on behalf of these telecoms.
A section of Ugandans are not happy with Airtel’s restrictive nature. Whereas the MTN model encourages large sized franchise agents, whereby Mbiire/Bitature’s Simba Telecom can galvanize the whole of Buganda region as Minister Okello Oryem’s Tabley Telecom does the entire Northern, in the Airtel’s case the franchise market is too fractured. And the idea is to avoid a situation where one franchise partner becomes too powerful so as to threaten the powerful Indian expatriates calling shots at Airtel Uganda as they take all profits. That is how Airtel has 137 franchise partners covering the same Uganda-wide market where MTN has only 12 larger ones.
It’s only Keswawal, a wealthy trailer-owning Indian with a big presence in the transport and logistics sub sector, who the influential Indians at Airtel Uganda have allowed to loam large and have a significant geographical mobile money market under his franchise partnership. He is their great guy not only because he is personally well known to the Group global owners back home in India but also because he one time contributed Shs10bn towards resolution of a staff crisis that was imminent at Airtel.
Shs10bn was required and this dude stepped forward to do the needful, a thing that strengthened his relationship not only with Airtel Uganda but globally. As a result, the whole of Nakasero market territory has been preserved for his franchise partnership as has been the case with Jinja, Wakiso, Lungujja, Natete and the Entebbe neighborhood. It’s from this expansive territory that he makes up to Shs270m in commission per month at a time his other contemporaries are netting at between Shs4 and 10m. Also a close friend of Annit Kapul, Keswawal keeps between Shs5bn and 10bn invested in his Airtel money franchise dealership at any one point in time.
Tycoon Mandela is one of the newest entrants into the Airtel franchise partnership dealings and his entry has equally created some uneasiness in some quarters with some stakeholders perceiving this as an attempt to crowd out native Ugandans more. There are also many issues to do with Airtel’s wewole, mobile banking as we shall enumerate in our subsequent publication.
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