ANALYSIS : Price wars loom as Tigo launches

Tigo, a subsidiary of Millicom International Cellular has started its operations in Rwanda  promising to offer the cheapest call tariffs on its per second billing platform, igniting a price war in the industry. Tigo’s entry into Rwanda has broken the longstanding duopoly enjoyed by MTN Rwanda and Rwandatel, and competition in the mobile space has started to intensify with all the three GSM operators vying for market share.
Tigo CEO Alex Camara
Tigo CEO Alex Camara

Tigo, a subsidiary of Millicom International Cellular has started its operations in Rwanda  promising to offer the cheapest call tariffs on its per second billing platform, igniting a price war in the industry.

Tigo’s entry into Rwanda has broken the longstanding duopoly enjoyed by MTN Rwanda and Rwandatel, and competition in the mobile space has started to intensify with all the three GSM operators vying for market share.

A cut-throat price war has started to significantly trim-down call and mobile internet tariffs.

During a press briefing on Thursday last week, ahead of the official launch, Tigo officials said that their call rates are uniform at Rwf1.5 minute to any network in Rwanda.

“Tigo customers will have the additional benefit to make Tigo to Tigo calls at just Rwf1 per second during nights - starting at 8 pm - and weekends all day,” Alex Kamara, the company’s Chief Executive Officer (CEO) said.

Experts say that Tigo’s launch with favourable per second call rates has already pushed rivals MTN and Rwandatel into panic.

Rwanda’s biggest mobile operator, MTN Rwanda, has cut per second call rates by 22 percent, in what has been largely interpreted as an instant response to the prices deployed by the new kid on the mobile block.

MTN says in its latest adverts that its prepaid clients on the per second billing platform will make calls of as low as Rwf1.30 during peak times, Rwf1.08 during weekends and Rwf0.15 during happy hours (12-5am).

The operator also fixed charges of its Business Time platform for post-paid clients at Rwf65 during peak hours, Rwf55 throughout the weekend and Rwf9 during happy hours.

These new Christmas tariffs follow MTN’s recently concluded 20 percent bonus promotion on airtimes.
In an interview with Business Times, Issiaka Maiga Hamidou, the new CEO of Rwandatel said that they are also in the process of reviewing their call charges.

“Regarding the voice, we are in a process of doing some reviews but prior to that we have Rwf1.5 per second,” he said.

Whereas the MTN and Rwandatel current charges are seen as promotional services, Tigo says that its tariffs are not an advertisement avenue.   

“We are going to enter the market with a certain set of rates and these tariffs are not promotional,” Kamara said.
On the basis of mobile internet charges, Tigo said it will charge Rwf30 per megabyte (MB) on its GPRS service through the 2G, 3G and 3.5G technologies.

Recently, MTN Rwanda reduced its mobile Internet tariffs by 50 percent to Rwf30 per MB from Rwf60 per MB.

An insider who spoke on condition of anonymity because he does not speak on behalf of MTN said that the company reduced these charges in anticipation of Tigo’s new tariffs.
In order to consolidate its position as Rwanda’s second largest Internet Service Provider by market share after Rwandatel, the source said that MTN had to abandon its fixed Rwf20,000 monthly mobile internet charge in favour of the a pay go standard platform which is apparently more flexible.

It is also highly speculated that in the new proposed tariff structure, Rwandatel will switch to the pay go standard from the current monthly mobile Internet tariff of Rwf41,500.

So, the entry of a third telecommunication operator comes as an opportunity for subscribers to receive innovative products and services that will link Rwanda to the world through data access, voice access and other means of access in a healthy competition. 

Government also has an intention of issuing a fourth license as it seeks to liberalise the telecommunications industry to meet its ambition of attaining six million mobile subscribers by 2012.

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