Airtel to shake-up MTN, TIGO cosy duopoly

The imminent entry of Bharti Airtel into Rwanda’s telecom sector is set to spur a new competition regime characterised by lower call tariffs, threatening to hurt the market share of MTN and TIGO as well as ending the oligopoly presently enjoyed by the two operators. The telecom giant, which was awarded a mobile operating licence early this month to rollout 2G and 3G network technology, is set to invest US$100m (Rwf59b) in the next three years. Bharti Airtel is the world’s fifth largest telecom operator and its impact is being felt in Uganda, Kenya and Tanzania, the markets in which it rolled out lower call tariffs. Rwanda becomes Bharti Airtel’s 17th operation across Africa. While the operators planned entry has raised expectations within the local public, the method through which it was awarded the license raised some questions among industry experts. “Because of the vacuum we currently have, we needed another operator to come and increase the level of competition with the right investment and right footprint to respond to our requirements, hence rewarding Airtel the licence,” RURA’s Director General, Regis Gatarayiha told Business Times while explaining why the regulator did not follow the usuql bidding process when they were awarding Airtel the operqting license. He explained that the Minister of ICT in his mandate is empowered to issue a license in a move he described as ‘individual licence’ based on the recommendation from the regulatory board. The sector regulator targets six million subscribers by 2012, up from 4,247,751 users as of August this year. With the imminent entry of a new player, RURA targets to raise mobile penetration rate to 60 per cent by end 2012 from 39.6 per cent. According to Gatarayiha, the rate should rise to 50 per cent by August next year. “By end of 2015, Airtel is targeting to have 36 per cent of the total market share and with the aggressive proposal we have received from them, they plan to have a geographical cover of 95 percent in five years and 85 percent by end of 2012,” Gatarayiha said. It took MTN 12 years of full operation to cover 96 per cent of the country. Official statistics show that MTN still dorminates Rwanda’s telecom industry with 2,830,112 subscribers as of August while TIGO has 1,417,639. According Bharti Airtel officials, the era for voice competition is over and with a planned outlay of Rwf59b, the operator promised to rollout broadband mobile money transfer services. MTN Rwanda’s Chief Executive Officer, Khaled Mikkawi said MTN is well positioned to compete with the third operator. “‘We welcome Airtel to Rwanda and look forward to working with them to increase the penetration of voice and data services in Rwanda. No doubt the entry of a player like Airtel ups the competition stakes in Rwanda, but it is for the greater good. Customers have a choice and our companies have the challenge to ensure that we are their preferred network of choice,” said Mikkawi. Coincidentally, the MTN boss noted that his company operates in many markets where Airtel operates and in those markets they have had cordial and healthy competition. “I believe it will be the same here in Rwanda,” he added. Tigo Rwanda’s Acting Chief Executive Officer, Diego Camberos noted that every market is different and they will closely watch how it develops in Rwanda. “It was no secret that a third license was going to be awarded. For Tigo this changes nothing, we will keep putting the customer first by understanding the needs of the market and launching offers accordingly. We believe that competition is healthy therefore we welcome Airtel,” Camberos explained. Airtel’s operations in the region In Kenya, Airtel Kenya launched aggressive price war to woo subscribers, leading to rates falling by more than 80 percent to as low as Ksh1 (Rwf6.2) per minute in the last one year. In Uganda where operator recently increased calling rates from Ush180 (Rwf38.7) per minute to Ush240 (Rwf50.9) per minute its still lower than MTN Rwanda’s calling rates of Rwf90 per minute and TIGO’s Rwf90 per minute on any number in Rwanda, promotions exclusive. dougie85@gmail.com