Issue Seven - Conversations on Technology, Business and Society

THE DOUBLE ISSUE | www.pctechmagazine.com
REGIONAL
Uganda faces
telecom price wars
From on Page 10
make calls within the same network for a specific period
without any charge. Calls on other networks would be
charged at Ushs340. But upon expiry of the period, the calls
under Orange network are charged Ushs320 per minute
unless the customer recharges his/her credit balance.
In one of MTN’s packages, MTN Zone, customers call on
a percentage discount even across other networks, but the
subsidy is always higher for calling on MTN network.
However, the promotions apply only to subscribers of the
respective networks and they are temporary anyway. The flat
mobile telephone call rate in Uganda is shs 340.
To be competitive following the low call rates in the
regional telecom sector occasioned by recent changes in
Kenya, Uganda will need to review the interconnection rates
further downwards. The Shs131 is still much higher than
Kenya’s Kshs 2.1 (slightly over Ushs50).
Further, even as the UCC claims that the uniform
interconnection rates took effect on July 6, there is nothing
yet to show for it in terms of tariff reductions.
Telecom companies remained cagey on whether they have
started implementing the new interconnection tariff. Fred
Masadde, the Zain spokesperson, declined to comment. Mark
Kaheru, the marketing communications officer at Uganda
Telecom, only referred The Independent to the company’s
legal department.
The UCC Senior Communications Officer, Fred Otunnu, too
declined to comment, saying he was on leave. Questions sent
to the UCC on why the interconnection rates in Uganda have
been set much higher than in Kenya remained unanswered
despite assurances from Isaac Kalembe, the UCC media and
public relations officer, that he would forward them to the
‘right’ officers.
Many of the new changes in the Kenya’s telecoms sector
are attributed to the entry of India-based telecom giant
Bharti Airtel, which acquired Zain Africa operations last April.
On his first visit to Kampala, Bharti Airtel’s international CEO
Manoj Kohli, sounded an early warning.
He said Zain Uganda, which will soon rebrand to Bharti
Airtel, has earmarked US $100 million to expand its network
and improve its technology.
It was a clear statement of intent, especially targeting MTN
Uganda’s dominance of the market. Bharti Airtel is famous
for targeting low-income earners by offering competitive call
rates.
Zain Uganda is therefore expected to announce lower call
rates as a warning shot in a tariff battle that will be protracted
and exhausting. But most likely they would still be higher than
Kenya’s because of the disparity in the interconnection tariffs
between the two countries.
Besides the interconnection fee of Shs131 for mobile
telephone calls, government charges a 30 per cent tax on
mobile telephone calls (12% excise duty and 18% VAT). The
excise duty on airtime in Rwanda was recently increased from
5 per cent to 8 per cent.
In an affidavit sworn in support of MTN’s suit in court to
halt the implementation of the interconnection rates which
UCC had set, Tom Mbalinda Nuwagaba, a senior manager
of commercial law and litigation, had argued that upholding
the tariffs was against public policy and would hurt taxable
revenue. He did not elaborate. But basic economics shows
that lower rates would boost productivity and widen the tax
base.
SEPTEMEBER - OCTOBER 2010 | PC TECH
NEWS
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