More questions than answers as RURA designates Rwandatel as data leader

Telecommunications regulator, Rwanda Utilities Regulatory Agency (RURA) announced that Rwandatel is the data leader, weeks after the operator was stripped of its GSM license, a decision that sent shock waves within the entire sector.As RURA released a report on the state of the sector as at December 2010, some observers say that Rwandatel’s future looks increasingly uncertain in the coming days despite holding a lofty position as data sector leader.

Telecommunications regulator, Rwanda Utilities Regulatory Agency (RURA) announced that Rwandatel is the data leader, weeks after the operator was stripped of its GSM license, a decision that sent shock waves within the entire sector.

As RURA released a report on the state of the sector as at December 2010, some observers say that Rwandatel’s future looks increasingly uncertain in the coming days despite holding a lofty position as data sector leader.

RURA’s latest report, which comes at a time government and MTN Rwanda have petitioned the commercial courts to liquidate Rwandatel, brings out a rather curious revelation.  It further plunges the sector into wild assumptions on the controversies surrounding the firm.

Analysts say that RURA’s latest report is a contradiction of sorts, to its earlier position, that led to the decision that culminated in Rwandatel being stripped of its GSM license.

“If RURA had taken a rather hard-line position that Rwandatel was technically insolvent, an allegation that meant that as an operator, Rwandatel was not in a position to adequately offer its basic service provisions, why then is RURA now saying in this report that Rwandatel is on top of its game within the data segment?” an industry watcher who did not wish to be named due to the sensitive nature of the topic posed to this writer.

RURA states that Rwandatel is the data leader within both fixed internet broadband and mobile internet market.

The report states that: “Rwandatel’s market share is at 52 percent followed by MTN at 35 percent within broadband while Rwandatel leads at 59 percent while MTN and Tigo have the remaining 38 percent and three percent market share respectively within the mobile internet segment.”

Much as it is dogged with controversies, Rwandatel’s position within the data segment, based on RURA’s report, makes a compelling case for a well thought out rescue plan.

It is clear that Rwandatel’s services and positioning within the market as data leader puts it at a vantage angle in the sector with some analysts even listing it as a strategic national asset.

Just prior to the UN resolution that called for a freeze on Libyan government assets, Rwandatel was  20 percent owned by government through the Social Security Fund of Rwanda with the majority 80 percent owned by LAP Green Network of Libya.

The UN resolution effectively means that government is now in total control of Rwandatel operations even as it moved to liquidate its assets.

While MTN Rwanda is being seen as the main beneficiary of Rwandatel’s woes as it has been angling to take up more market share within data segment, it has not escaped observers that it will take several months before MTN would be able to adequately fill the void that will arise out of the likelihood of completely shutting off Rwandatel, if the indication from various public offices is anything to go by.

Liquidating Rwandatel is worrying, bordering to a downright suicidal mission for the economy.

Already, RURA is on record as saying that since the start of the Rwandatel controversy; it has down graded the national ICT targets to reflect the emerging realities.

However, over the past year, Rwanda’s telecoms sector has seen the kind of intense competition that was unimaginable just few years back.

The impact of this fundamental change this year, was meant to be much deeper within the local data market mainly through external influences such as the launch of new, private submarine cables landing in Africa.

International wholesale prices have fallen by more than 50 percent in many markets, bandwidth supply has risen by nearly 300 percent in 2010, and some countries have raised their international bandwidth intake nearly tenfold, according to authoritative reports.

As more submarine cables prepare to become operational in the year 2011, the future of bandwidth in Rwanda looks brighter as more fundamental changes are set to unfold. Rwandatel was thus meant to be a central player in this newly emerging scenario, before it was stripped of its GSM license.

However, an indicator that RURA’s argument against Rwandatel holds some water is the fact that the report is quick to highlight that Rwanda’s mobile teledensity as of December 2010 witnessed a decrease from 36 percent to  34 percent while the fixed teledensity stood at 0.38 percent largely on account of Rwandatel’s crippled financial position.

“The mobile teledensity has slightly decreased as compared to the previous quarter due to a decrease in Rwandatel’s mobile subscriptions that shrunk from 535,710 as of  September 2010 to 306,706 mobile subscribers as of December 2010,” the reports states.

Given the circumstances obtaining in the market and a future scenario that looked brighter for the sector before events of the last five weeks, the question is-what is Rwandatel’s likely future? Is the state going to reposess Rwandatel before selling it off to yet another new player without particularly compensating LAP Green due to the fact that LAP Green ran down a strategic national asset?

Why would government move so quickly to the courts to liquidate a strategic national asset after RURA stripped this very strategic national asset of its GSM license in a situation whereby the company under question is still partly owned by the very state?

These are questions that are begging to be answered as the Rwandatel controversy raged on.

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