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Uganda Telecommunications Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: July 2009 Product Code: R302-7047 Description End of year results for Uganda’s mobile market indicate that BMI’s previous estimate was almost exactlyright. At the end of 2008, the mobile subscriber base stood at 9.451mn, with the penetration rate still justbelow 30%, showing there is much growth still to come. A growth rate of 73% in 2008 indicates thatfuture growth is unlikely to be slow in coming years. There have been some concerns that the economicslowdown is going to lead to a reduction in growth in 2009, but we see this effect as being fairly muted. Amore noticeable effect will likely be a reduction in customer spending, which will impact the operatorsthrough a further reduction in ARPUs.Indeed, the ever fiercer competition, especially since Orange Uganda joined the fray in early 2009,means that mobile operators cannot afford to sit on their laurels or cut back on investment into expandingand improving their networks. Uganda Telecom (UTL)’s accelerated expansion since it ramped up itsnetwork expansion in 2007 is a case in point, showing that greater coverage and greater capacity meanmore subscribers. With five active operators nobody can afford to concede any ground. This is especiallytrue in a market like Uganda where growth potential is high but consumer spending power and thereforeprices are low, where profit comes from numbers rather than premium services. That being said, the operator would be wise to pay some attention to value-added services (VAS). Themarket may be small, but it will be important in the future for propping up revenues. To this end, bothUTL and Zain have launched mobile banking and payment services, similar to the M-PESA service inKenya which has proved popular. SMS is also growing in popularity in Uganda, and the pattern of usage, combined with the pattern ofgrowth in minutes of voice usage, paints an interesting picture of Ugandan mobile habits and indicatesjust how important prices are to consumers. Minutes of use have shot up, but only for calls within thesame network. In their drive to offer their customer the lowest prices, operators tend to discount thesecalls very heavily, and it seems that rather than shell out repeatedly for cross network calls, many mobileusers are buying more than one SIM card and using each to call just within its own network. At the sametime, the numbers for cross-network SMS have shot up, indicating that where they don’t have multipleSIMs to use for each network, people are using SMS instead of calls, as they can be cheaper. It is a good sign for the operators that SMS use is growing, as it has generally been quite low in manyAfrican markets and it can provide a way in to more high value VAS. For example, once consumersbecome more accustomed to using SMS themselves, they may be more open to SMS informationservices, such as most of the operators offer. Table of Contents
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