UCC okays Airtel, Warid deal as subscribers are reassured

Mergers, Acquisitions and Financial Results

The Uganda Communications Commission (UCC) has assured ‘former’ Warid Telecom customers of seamless continuity in products and services as it gives Airtel a green light to proceed with the acquisition of Uganda’s third largest telecommunication company.

Speaking to journalists in Kampala last week, the UCC executive director, Mr Godfrey Mutabazi, said the commission will continue to provide regulatory oversight to ensure that the merger of the two telecom operators does not disrupt the industry in any way but rather enhance its efficiency.

Airtel, which applied to UCC for approval of its merger transaction with Warid received a ‘no objection’ to the application from the regulator last week. Airtel announced late last month that it had signed an agreement to acquire Warid Telecom’s Uganda business operations, pending regulatory approvals.

The deal puts Airtel Uganda and its biggest market share rival - MTN neck and neck in subscriber numbers, with the former being about 300,000 subscribers ahead of the latter. MTN said it had 7.7 million subscribers as at December last year while Airtel says it will have 7.4 million after adding Warid’s 2.8 million customers.

The full integration process of the two entities is expected to take a maximum of a year following the approval to ensure seamless integration of networks, according to UCC.

During the period, the two entities will continue operating in their distinct brands. It is, however, still unclear whether the merger will phase out the Warid brand in Uganda similar to what happened to the Zain brand after its acquisition by Airtel in 2010.

Airtel entered the Ugandan market in 2009 after buying Zain Africa operations, resulting into a rebrand in 2010 while Warid launched its operations in Uganda in 2008.

Details about the transaction costs are also still unknown but Uganda Revenue Authority is expected to cash in on capital gains tax of up to 30 per cent of the profit to be realized on the transaction. Airtel Publicist Pheona Wall said the firm is now going to embark on a plan to complete the transaction.

Eng Mutabazi said the merger is likely to increase competition leading to competitive pricing, more innovations and improved quality of service.
With the latest development, both Airtel and MTN have to sharpen their operational strategies in order to claim a solid market leadership position within Uganda’s telecom market.

There are about seven players in Uganda’s telecommunication market including MTN, Airtel, Warid, Uganda Telecom, Orange, Smile and K2 – the latest entrant.