Booming Mobile Sector Attracts $75 Million in New Investment in Uganda

Mergers, Acquisitions and Financial Results

A year ago, the government ended the duopoly that had given exclusive rights to MTN Uganda and Uganda Telecom Ltd. Barbara Among reports the Uganda communications sector attracted over Ush127.7 billion ($75 million) in investment last year, according to the latest investment report by the Uganda Communications Commission (UCC).

This figure is an increase of 47 per cent from the previous financial year. It excludes capital investment by the newly licensed service providers, which is estimated to be close to $70 million in the previous year.

The report, A Review of the Postal and Telecommunications Sector, June 2006 - June 2007, says revenue generated from the sector was estimated to be $360 million, an increase of 20 per cent from the previous financial year. The industry profit after all costs including taxes stood at $30 million.

The communications sector grew by 33.3 per cent for financial year 2006/07, a reversal of the trend of the previous three financial years when the sector had started to slow down. The peak was reached in 2003/04 when the sector grew more than 50 per cent.

The report said there are 3.7 million phone subscribers in the country, of whom 3.6 million own mobile phones - a growth of 33.3 per cent.

"This is a net addition of 1.5 million customers between June 2006 and June 2007. It represents a 68 per cent annual growth rate," says the report

"Competition and the surge in investment expenditure have contributed to this growth. Increased government usage and investment by the new operators is projected to push the growth further in the 2007/08 financial year," says the report.

Reduced start-up cost where, for instance, a new handset costs Ush65,000 ($39), a sim pack Ush3,000 ($2) and aggressive marketing account for the growth.

However, the surge in growth may also have led to a decline in quality of service. Operators are yet to increase their switching capacity, which currently stands at 4.2 million subscribers.

The report says 14 per cent of Uganda's population of 28 million people owns a phone; over 40 per cent use public payphones while tele-density (measure of the percentage of population owning a fixed/mobile phone) is 13.3 per cent, up from 8 per cent last year.

The report says there has been an increase in innovative services and pricing schemes, steep reductions in connection charges, removal of subscription charges and emergence of international calling cards.

East African