Telecom Firms Grossed Over US$305m Last Year in Uganda

Mergers, Acquisitions and Financial Results

Annual gross revenues of telecom operators in Uganda have gone up by 33 per cent, with main players Celtel and MTN posting the biggest increases.

The third player Uganda Telecom Ltd (UTL) lost ground to its competitors with its annual income going up by a small margin, according to the latest figures.

The figures were released last week when the three companies last week issued cheques to the sector regulator, Uganda Communications Commission (UCC), the compulsory one per cent of total annual earnings.

Market leader MTN issued a cheque of Ush3.2 billion ($1.8 million); UTL, Ushs1.36 billion ($777,714) and Celtel, Ush704 million ($402,285).

This means MTN's gross revenue for 2006 was over Ush326 billion ($186 million), an improvement from slightly over Ush200 billion ($114 million) in 2005, while Uganda Telecom posted Ush136 billion ($77 million), up from its previous showing of Ush114 billion ($65 million).

Despite making inroads against its immediate competitor, Celtel raked in just over Ush70 billion ($40 million) from only its mobile and Internet services, which is $37 million shy of UTL's revenue. UTL's revenue streams include mobile, landline, Internet and data systems.

Celtel's earnings remain the lowest, but previous figures show that the company's earning nearly doubled in 2006. In the 2004/05 financial year, for instance, Celtel recorded annual revenue of about Ush36.7 billion ($20.9 million), while the year earlier its revenue card registered Ush15.3 billion ($8.7 million).

Managing director Yesse Oenga said during the cheque presentation that his company had reaped the benefits of its expansion within the country and the region. "We've managed to deliver that contribution from a commercially viable expansion programme," said Mr Oenga.

Celtel was the first company in September 2006 to expand its network beyond the borders across the East African region, later moving into Central Africa, and now has a network spread over 12 African countries. Competitors MTN and UTL have since been forced to responds to this move by entering deals with players across the borders in Kenya and Tanzania.

A source at UCC said that figures of the companies' income are credible as they are determined from the fully audited accounts of the operators. As part of its licensing duties, UCC is mandated to impose a one per cent levy on the companies' gross annual income, remitted to the regulator as contribution to funding rural communications projects in the country.

The Rural Communications Development Fund (RCDF) set up in 2001 has now seen investment of over $24.5 million from the World Bank alone and over $10 million raised from the levy on operator incomes and parliamentary allocations.

Although Uganda's tele-density has improved, it is still below the recommended universal access figure "of a phone within 15-minutes walk" in the case of Uganda, which begs the question whether investment in the area or even the one per cent levy are adequate.

UCC executive director Patrick Masambu told The EastAfrican that his outfit has not received ant instructions from the minister in charge of ICT to raise the levy so as to cover more ground.

Instead, the hope of better access is hinged on completing the projects on the ground - which ambitiously target phone access for every hamlet in the country have access to a phone by 2010 - implying a penetration rate well in excess of 20 per cent.

"Our target is to have a phone in every hamlet by 2010, and have a change in the RCDF policy to focus more on moving away from voice telephony," said Mr Masambu. He also added that more players coming into the sector would translate into more funds available to improve rural communication facilities.

Since its establishment, RCDF has seen over 500 projects completed - Internet points of presence, cafes, training centres, web portals, pay phones, research projects, postal support projects, multi-purpose community centres and school ICT projects. However, 2,500 projects are still under way, yet to deliver service, while not a single health ICT project has been completed and only one call centre is under way.

When 2007 figures come in later this year, the companies' earnings are expected to go above $305 million as subscriber numbers in the sector went up from just over three million in March 2007 to 4.7 million, according to the UCC executive director.

The East African