Tom Gutjahr is Tigo Rwanda’s new chief executive joining the market in January after running another Tigo operation in Chad. Gutjar, an Austrian comes with vast experience having worked in different markets with Orascom Telecom Algeria, Mobilkom Austria and Vodafone Slovenia. Below he talks to Fred Oluoch-Ojiwah of The New Times on different prospects of Rwanda’s telecom industry in 2011.
Tariffs are still high in Africa compared to those in other similar markets. Does it mean that the current tariff structure in Rwanda can still go down?
Tariffs in Africa vary widely across markets. It is not 100 percent correct to say that tariffs in Africa are higher than on other continents. The tariffs that Tigo Rwanda is proposing are extremely competitive in any European and American markets.
Many of these subscribers would love to enjoy the same tariffs that Tigo Rwanda customers are enjoying. It is difficult to say if tariffs can still go down. But, in general, pricing depends on a number of things including what customers are prepared to pay. It also depends on the cost structure and on whether customers are actually calling and the level of competition. Pricing also depends on advances in technology.
If it is possible for tariffs to go down then the next question is, how can that happen?
Basically as stipulated in the previous answer it depends on a number of different factors.
How is Tigo Rwanda perceiving the prospects of a fourth national operator coming to Rwanda, given the fact that Rwanda still has East Africa’s second lowest penetration after Burundi?
Four or more players can be a big mess for African telecom markets. Both the operators and the subscribers can be affected accordingly. Take, for example, Sierra Leone, Central African Republic and Somalia. The quality of communication is very poor as operators do not generate the means to invest into network upgrades and new technologies.
A fourth national operator is good for competition but might not be good for penetration. What if operators fail to generate enough money to build better coverage?
In many cases, countries with two operators do not necessarily enjoy sufficient competition that can actually bring down prices like in the case of Ethiopia and Cameroon.
Given that price levels in Rwanda are already low, the addressable market is small with a very young population. Rwanda has a beautiful terrain but being hilly it gets quite expensive to cover. I do believe that the country and the telecom market are much better off with the current competitive setup. But this also depends on all the other stakeholders including the regulator and government.
Despite a slowdown in Africa’s subscription, revenues are expected to grow by over 6 percent by end 2015. Given that fact, in Rwanda, how can operators stay lean while growing their revenue base?
It is obvious that the African subscribers, the ones who can afford spending on these services, already own a mobile phone. Many of them are also already connected to the Internet.
Because of certain trends in the economic outlook, the future African subscribers will have lower revenues and probably less consumption. This is a fact that operators must live with. Additional services or mobile Internet can help to compensate these lower revenues to a certain extent. Every operator that is exposed to competition will aim to remain lean and efficient, independent of revenues.
If we were to have an operator such as Bharti Airtel as the fourth national operator, what does such a prospect mean for Rwanda?
There have been numerous press mentions about Bharti Airtel’s future prospects in the African market. Some of the media reports say Bharti Airtel will significantly change things in Africa. Bharti Airtel is a respectable competitor who is also significantly well known for low pricing and outsourcing of its operations. Tigo has practiced these things for years. The tariffs and services that Rwandan customers enjoy with Tigo Rwanda today are more competitive than the tariffs introduced in many markets in Africa by many operators including Bharti Airtel.
Some of the emerging issues with African telecoms is the sharing of infrastructure to lower costs. When are such prospects likely to happen in Rwanda?
Tigo Rwanda is already sharing infrastructure with all operators in Rwanda. The telecommunication regulator is working on concepts to make the share of infrastructure simpler and more cost effective for operators. This will lead to better coverage for all operators across the country.
How about rural initiatives? About 70 percent of Rwanda’s population is basically rural? We are talking about overcoming lack of power, affordability and boosting access.
Compared to other African nations, Rwanda has an excellent infrastructure. The public power grid and road networks are excellent. This is good for easy access of radio towers for maintenance. It is also good because availability of power allows customers to recharge their phone batteries at little cost.
Rwanda is, by far, the African country with the highest density of radio towers that I know. In many African countries you will find a radio tower every 30 km, in Rwanda GSM towers are basically everywhere. I do not have sufficient data as yet to speak comfortably about the potential growth of mobile penetration, but I feel that also income levels and the affordability of mobile phones play a role.
All Rwandans can now benefit from extremely affordable communication packages with the Tigo Vuga 100 pack, which we launched recently. With only Rwf 100 you can talk for 100 minutes that you have to use within one day. It’s enough to send an SMS to 7100 to benefit from this great offer. This should make mobile telephony accessible for a large part of the population.
To what extent are operators looking at rural Rwanda as being of strategic importance to their business plan for 2011?
Tigo Rwanda is building a wide-reaching distribution and radio network to reach even the most modest of villages. This is part of our license obligation and part of our commitment to Rwanda and Rwandans.
Given that villages have population of low income earners with many yet to own a mobile phone, it is no viable option for any mobile operator to build a business strategy focusing only on rural areas. New, cheaper technologies from equipment manufacturers and site sharing initiatives will also help to bring the cost of rural coverage down.
What are some of the most outstanding issues facing operators as we sail through 2011?
I imagine that given the very different market position of all mobile operators, the challenges must be very different.
Any concluding remarks in terms of how your brand will be different in 2011?
Tigo Rwanda is a young, fresh and a simple brand … we really care about our customers and believe we need to listen to their needs and address them accordingly. Tigo is present in many fascinating markets across Africa and the Americas where millions of customers enjoy great communication quality, high-speed Internet and innovations at fair prices.