Competition hurts MTN Rwanda revenue

MTN Rwanda, the country’s leading telecom company by market share, has said that its revenues dropped, last year , on account of increased competition in the sector.
MTN’s COO,Andrew Rugege (File photo)
MTN’s COO,Andrew Rugege (File photo)

MTN Rwanda, the country’s leading telecom company by market share, has said that its revenues dropped, last year , on account of increased competition in the sector.

“Our revenues suffered because of the way the market was behaving…with the advent of competition and the  tariffs, promotions they brought on board; it was difficult to realize the revenues..,” Andrew Rugege,  MTN's Chief Operations Officer (COO),told Business Times in an interview on Monday.

Without divulging figures of the diminished revenue, the COO noted that promotions unleashed by the two competitors (Tigo and Rwandatel), last year ,negatively affected their revenue growth targets.   

“Some competitors went from Rwf30 a minute to Rwf10, then Rwf5; others down to Rwf3; although we had a ‘safety net’ in terms of the promotions that we run, in that we did not  really have to reduce our tariffs ; all this means that the money coming in is much lower than it was,” he said.

In August, last year, MTN launched a series of promotions to celebrate the company's 12-year existence in Rwanda, including discounts on the MTN Zone and an offer on Wi-Fi booster.

Despite the dwindling revenue, the COO mentioned that the telecom giant managed to attract additional 700,000 subscribers to its network, pushing up its total subscriber base to over 2.3 million from 1.8 million subscribers in 2009.
“We have had more  usage (minutes on phone) last year compared to increase in subscriber numbers  mainly because of the promotions that took place in terms of the tariff perception and innovative products like the MTN Zone that we have encouraged people to use the phone more,” Rugege observed.

The company also benefited from the successful roll out of its Mobile Money service in February, last year, with approximately 5,000 transactions carried out every day through the service.  

The company had planned to slash investment by 55 percent to $45m (Rwf25.6 billion) in 2010, though the COO attributed this to heavy investments made in the previous years.

“Between mid 2008 and mid 2010, we invested over $200 million, when you look at 2010 alone, we reduced investment but we had frontloaded the investment.”
In 2009, the company sunk approximately $100 million (Rwf56.9m) in network upgrading and operations.

“(With) the kind of growth that we were going through from 2006, we were doubling subscribers. This meant that we primarily had to increase capacity both on our side to handle the calls and also capacity, on our switch to be able to process that growth,” he added.

The COO said, this year , the company will focus on increasing its data and internet capacity. MTN was ranked by Rwanda Utilities Regulatory Agency (RURA) as the leading provider of data and internet services with a market share of 78.44 percent.

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