Third telecom company coming

n a period of just two weeks, Rwanda’s telecommunication industry has seen great incentives and innovations.

n a period of just two weeks, Rwanda’s telecommunication industry has seen great incentives and innovations.

Both Rwandatel and MTN-Rwandacell are positioning themselves, with the aim of remaining or becoming leading telecom service providers. But Rwanda Regulatory Authority Rura says come mid this year, more competitors are likely to be licenced

It is therefore likely that better and efficient services will be provided. In Britain’s experimental introduction of competition into telecommunication industry, it was suggested that too little competition is not much better than none at all. Therefore, as it is always said "in the competitive environment, there’s survival for the fittest", any service provider who does not adjust with the changing market demands could be left out.

Firstly, MTN-Rwandacell cut all its call rates. Local calls were reduced by 35 per cent while international ones dropped by 60 per cent, making calls slightly affordable in the East African region. And late last week, Rwandatel and Huawei Technologies, a global leader in providing the next generation telecommunication network also signed a $35 million (Frw19.2 billion) network expansion contract.

Following the Frw19.2 billion agreement, Rwandatel will start offering mobile phone services, meaning the firm is to grab some mobile phone customers from MTN. Therefore it will be real telecom competition. The move will break MTN-Rwandacell’s monopoly in mobile telecom market base that has lasted for a decade.

And even though players in the telecom business complain of Rwanda being expensive – thus pushing call tariffs higher in order to recover costs, John Baptist Mutabazi, director telecom development in Rura said that always call tariffs change while lowering not hiking.

It is therefore true that the two telecom companies are likely to lock themselves in call tariffs wars, like it is, in some neighbouring countries. Despite MTN-Rwandacell’s reduction of call rates, Rwandatel still offers the lowest in the industry. Per minute, Rwandatel charges Frw55 to call on Rwandatel, and Frw90 to MTN-Rwandacell while Frw50 is charged for sending SMS.

In fact, incentives and innovations by the two competitors could be as a result of their competitive strategies. According to Mutabazi, there are only two telecommunication companies in the country but strategising to have a strong market base.

Francoise Ngabonzinza, a businessman also said that the competition is not big enough but competitive services and cutting call tariff rates is good news.

"Had it not to be the duopoly agreement signed to prevent other competitors from starting telephony business, Rwanda could perhaps have the best rates in the region," he said.

In Uganda for example, the coming of Warid Telecom and newly licensed Hits Telecom has brought about an improvement. More affordable call rates have been introduced on the Ugandan market. Warid Telecom charges as low as Shs128 per minute (about Frw40), this lowest in the region.

Even though a player in telecom business here says operators in neighbouring countries invest in one base station while here, MTN-Rwandacell for instance has to invest in five because of the terrain—thus pushing call tariffs higher to recover costs, economists argue that where there are many players, there’s no room for excuses but rather to adjust depending on the situation at hand to stay in business.

It is believed that MTN-Rwandacell’s reduction came-in when a third player (competitor) in the telecommunication business was about to be licensed. But its also true that the company is not taking Lap Green lightly.

Two months ago, LAP Green Networks, a subsidiary of the Libyan African portfolio (LAP) an arm of the Libyan government acquire Rwandatel. The Libyan firm promised to invest over 300 million in 15 years, to revamp the telecom sector in the country.

Victor Kinuma, Rwandatel marketing manager, said his company will expand to every part of Rwanda, and will offer more affordable call tariffs and better services’ before the year ends. This could be a reality as they expect to rollout in new infrastructure that will support its GSM and 3G UMTS network services countrywide.

Patrick Kariningufu, Rwandatel chief executive officer says: "GSM will cover most of the populated areas and roads, while the 3G UMTS will mostly cover urban centres." The landline network is expected to replace the public switched telephone network (PSTN), a new generation network (NGN).

Rwandatel’s ‘competing initiatives seem to be slightly directed towards those of MTN-Rwandacell. Rwandatel announced that soon another $40m (Frw21.747B) contract will be signed, which will see them grow into a highly profitable and socially responsible firm. MTN-Rwandacell in this financial year 2008 is also believed to have set itself an aggressive growth plans with a capital investment of about $30m (Frw16.311B).

Themba Khumalo, chief executive officer MTN-Rwandacell while announcing the new rates further said that their strategic tariff changes was a direct demonstration of their commitment to extend the benefit of telecommunication to all citizens in support of the country’s Vision 2020.

Both companies are focused towards reconstruction of the nation and its social capital is part of Vision 2020 pillar. They are aiming at turning Rwanda into a prosperous knowledge-based economy with a developed basic infrastructure.

MTN-Rwandacell’s management announced to invest in improving in network coverage, new products and services to reduce call costs further, and soon initiating Blackberry technology.

Therefore, bigger and better services at competitive rates for Rwandans should be expected from the two competitors. But when more competitors come thus breaking the telecom duopoly, further reductions in call rates and better services might be experienced.

Ends

 

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