25 September 2007
interview
Nairobi — Samir Naessany, CEO, Hits Telecom - the boss of the new operator - spoke to BENON HERBERT OLUKA on Uganda's mobile telecommunications industry and his company's planned entry into the market in November.
Before entering the Ugandan mobile telecommunications market, you must have done some research. What did you find?
With call rates on the order of 16-20 US cents per minute, the Uganda market stands out as one of the highest-priced emerging markets today.
The national cellular penetration is under 13 per cent, with about four million subscribers by the end of 2007. This is still low in a country whose population is approaching 30 million.
Our findings put the addressable market at 14-15 million, which is an attractive market potential worth exploiting.
We see a huge potential in Uganda as a high growth cellular market coupled with the country's liberal, investor-friendly policies, which have contributed to the recent economic boom.
Hits Telecom is coming into a market that has three established players. What will be different about your service that is going to set you apart?
Leveraging our partnership with Alcatel-Lucent to build a state-of-the-art turnkey GSM network, customers of Hits Telecom can be assured of having access to the best network, best value for their money, innovative services, and widespread retail distribution channels.
Hits Telecom Uganda, which has access to a broad radio spectrum, will be extending its coverage to new markets, including semi-urban and rural areas of Uganda.
This is the cornerstone of the Hits philosophy - a firm belief that everyone in Uganda should have access to high-quality wireless network services at an affordable price, providing optimum value.
The new GSM network will contribute to Uganda's overall telecommunications infrastructure, making it one of the many countries in Africa investing in new solutions to enhance its communications infrastructure to better serve in the rural areas, where there is a critical need for wireless connectivity.
When do you expect to cover the whole country?
We have signed a $100 million network agreement with a major telecom equipment supplier. Currently, our network deployment is in progress.
We have a phased approach and have committed to a maiden launch during the Commonwealth Heads of Government Meeting in November.
We will initially cover Entebbe and greater Kampala, then expand to Jinja district and the rest of the country thereafter.
What will be the installed capacity of your network?
Our first network contract envisages a capacity of 2.5 million active subscribers.
High call costs have been a major issue in Uganda. What effect will the entry of Hits Telecom have on them?
Currently, a charge of almost 30 per cent (18 per cent vat and 12 per cent withholding tax) on every minute is levied on prepaid cellular operators and is passed onto the consumer.
Due to this taxation element, our discussions with the Ministry of Finance and the Uganda Communications Commission have been to recommend a reduction from the 18 per cent VAT taxation per minute while encouraging a growth in the subscriber base.
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