2014: 4G internet unveiled; free roaming calls for EAC travellers

The launch of fourth generation long term evolution, commonly known as 4G LTE Internet, in October, is certainly the biggest development in the local telecom world this year. 4G LTE enables high speed Internet uploads or downloads compared other technologies.
Woman speaks on a phone. Rwandans with mobile phones have risen to 7.6 million, as of October 31.(File)
Woman speaks on a phone. Rwandans with mobile phones have risen to 7.6 million, as of October 31.(File)

The launch of fourth generation long term evolution, commonly known as 4G LTE Internet, in October, is certainly the biggest development in the local telecom world this year. 4G LTE enables high speed Internet uploads or downloads compared other technologies.

Though there have been questions on the affordability of the service, sector players say it (high rate) is a global issue brought about by the cost of the device and running cost of usage. To use LTE, one needs an LTE-enabled wireless terminal or handset.

“The current pricing does not mean LTE has been over-priced on the local market, but that is the design of the technology globally. LTE-enabled devices are generally more expensive,” explained Ebenezer Asante, the MTN Rwanda chief executive officer, in a commentary in The New Times last week.

Away from the 4G LTE issues, there were numerous activities and developments that shaped the telecom industry during the year, creating mixed fortunes for both the players and subscribers.

Phone owners swell

Presently, there are over 7.6 million mobile phone subscribers of the 11.5 million Rwandans, representing a 73 per cent penetration rate, according to October Rwanda Utilities Regulatory Authority (Rura) statistics.

This is a 12.4 per cent growth in subscriber numbers, from over 6.7 million in January.

Sector analysts attribute this to the increased number of more affordable gadgets on the market, especially on the smartphone market segment that is dominated by brands like Tecno, Konka and Itel.

In addition, local telecom firms - Airtel, MTN, Tigo, as well as Internet service providers, like Liquid Telecom and BSC, invested some huge sums of money to improve and expand their networks to boost their market reach.

More investments, low earnings

The Rura figures show that the firms invested about Rwf5.1 billion during the second quarter of this year compared to Rwf3.2 billion in the first quarter. According to statistics, Tigo Rwanda invested Rwf4 billion compared to Rwf2.6 billion invested in the first quarter, while MTN invested Rwf826 million compared to Rwf620 million. BSC invested Rwf114.99 million, up from Rwf126.5 million up in the first quarter, while Liquid Telecom announced plans to invest about Rwf24 billion in next two years.

This infrastructure development is tipped to strengthen the firms’ competitiveness and make it possible for them to provide services at affordable rates.

However, despite these improvements, the telecoms registered marginal growth in terms of revenue during the year.

MTN Rwanda revenue grew marginally to Rwf20.2 billion during the second quarter of the year, from Rwf19.8 billion in the first quarter. Tigo recorded Rwf10.2 billion, up from Rwf10 billion, while Airtel earned Rwf3.7 billion, up from Rwf2.7 billion.

In the internet services segment, Liquid Telecom reported Rwf1.5 billion in revenue followed by BSC, New Artel, Axiom Networks, ISPA, with 4G Networks Rwanda trailing.

The poor performance was attributed to low spending power of most subscribers, with research findings indicating low average revenue per user (ARPU), which ultimately affected the profits of the operators.

According to ARPU data released last year, Rwandan mobile phone users spend an average of $2 per month, while Kenya subscribers lead, at $6.2, followed by Tanzania ($4.4) and Ugandan, $3.5.

The low ARPU means that majority of mobile phone users in Rwanda are low-end subscribers, with minimal ability to spend on mobile value added solutions, which reduces the effective rate of revenue realisation per minute for the operators.

With the low propensity to consume telecom products, operators naturally find it difficult to make returns on investments.

Telecom revenue is mostly driven by pricing and quantity of products offered on the market and Rwanda has some of the lowest prices in the world, according to operators.

This, however, did not dampen telecom firms’ resolve to invest more in the sector, as well as conduct promotions, worth hundreds of millions, to attract customers.

Airtel and MTN have sold their towers tower management firm, IHS Rwanda on a sell-and-lease-back basis in order to enable them concentrate on their core businesses. This arrangement is expected to ensure better delivery and improved call reception.

Tax burden

This financial year, the government increased excise tax on airtime by two per cent in June to 10 per cent, which analysts said would slow down the sector’s growth.

Of course the tax burden was transferred to subscribers in form of increased rates for calls, short messages and Internet. However, the telecoms have not openly complained though they were jittery at the beginning.

Cross-border money transfer, free roaming calls

The biggest gift this year for subscribers, especially the business community, could be the scrapping of roaming charges between Kenya and Rwanda in November under the one area network initiative, with Uganda expected to come on board soon.

The regional (Northern Corridor countries) one area network is expected to expand next year with the launch of cross-border mobile money transfer and scrapping of roaming charges on short messages and Internet usage across the region.

The Heads of State directed the concerned regulatory agencies in the three countries to expedite the implementation of these at last month’s regional integration projects summit held in Nairobi, Kenya.

Tigo already operates a cross-border mobile money transfer service between Rwanda and Tanzania. The firm launched the service in February with its Tanzanian sister company.

The two sister firms pushed Rwf121.3 million through their platforms between February and June, from 3,097 transactions carried out, according to the central bank’s August monetary policy report.

The telecom sector must up its game in the New Year, reduce incidences of dropped calls and offer subscribers more affordable rates, especially for data.

The cutthroat competition between them will, of course, get more fierce with each of the three mobile telecom firms trying to hook the most customers through incessant promotions and other client-targeted goodies.

business@newtimes.co.rw

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