The power to make it happen: Ugandan mobile operators to form rural power consortium

Top Story

Africa faces two linked problems that are holding back the extension of mobile services into a wider range of rural areas: diesel supplies are sometimes unpredictable and prices are high. For the first time mobile operators in Uganda this week sought to address the power problem by forming a consortium. Russell Southwood looks at what could happen.

Danish Hussain, the head of engineering at Warid Telecom, told journalists in Kampala last week that Warid, MTN, Zain and Uganda Telecom, have formed a consortium that will see the companies share costs incurred in electrifying their base stations across the country.

Warid already shares infrastructure with Orange Uganda but this new announcement is a big step towards solving a major problem. The more urban base stations with relatively easy access to roads and grid power can cost US$2,500 a month to run. By contrast, the rural bases stations without either of these advantages can cost up to US$20,000 month to run: in other words, each base station of this type costs an additional $210,000 a year to run. So both capex and opex are held high through lack of power to the base stations.

The Consortium plans to connect some rural communities to the grid and the obvious spin-off is that houses and business premises in those areas will get power supply.

In July 2007, News Update ran a Top Story entitled “Power to the base stations – A modest proposition” in which we said:”In a nutshell, the mobile operators need to appoint a private company to build and operate a power transmission network.”

The issue remains one of silo thinking. Africa’s regulators have universal access funds that they are extremely slow in spending. Mobile operators are extremely heavily taxed, with Uganda Government jostling for the pole position of taxing them most heavily.

Telephony universal access funds should be given to provide access to electricity for rural areas: many services (like broadcast television) arrive once a village has power. Government can grant mobile operators tax breaks to help set up privately operated consortia to tackle the problem.

And while we are throwing stones at those with silo mentalities, why not run fibre along the power lines that would be built? The marginal additional costs would be a negligible part of the overall budget and it would save operator spend on expensive national satellite cellular backhaul.

About a year ago I went through these ideas with one of the continent’s most progressive regulators. The idea did not fire up him up because all he could see were institutional problems: persuading government to allow telecoms regulators to tackle power would just be too difficult. Perhaps this new consortium of mobile operators will light the way for more to happen.