Julius Barigaba
5 October 2008
Nairobi — The Uganda Communications Commission reported last week that over $850 million has been invested in the country's communications industry over the past decade, generating a total revenue turnover of $2 billion.
The UCC was enumerating its achievements, 10 years after the 1997 Communications Act that paved way for the liberalisation of the industry.
There are 50 telecommunications service providers, just under 200 in FM radio business and 41 in TV. In postal services, there are at least 20 service providers operating national, regional or international courier services.
Over the same period, UCC reports, the country's teledensity has increased from one telephone per 400 people to one telephone per five persons -- a teledensity of 20 per cent in a population of 30 million.
The country, however, is still grappling with low Internet penetration levels, even with the $15 million that UCC has invested in its rural communications development project for the past five years.
Each of Uganda's rural districts has at least one Internet point of presence, Internet café, district information portal and ICT training facility, all at the district headquarters.
Uganda's communications industry is a tight market in which telecom operators have been forced into price wars to grow subscriber numbers, but it remains to be seen whether the market can support all the currently licensed companies.
For instance, the four operational telecom networks currently share 6.3 million subscribers between them, of whom market leader MTN has three million subscribers alone.
UCC executive director Patrick Masambu said the market has now reached saturation point.
We feel we have room to license more resale operators and public service providers who do not have to build their own infrastructure," said Mr Masambu.
He added that the market can now only accommodate resale operators, in the business of selling telecom products such as SIM packs and mobile phone airtime, as well as public service providers who operate by leasing space on the networks of other operators.
With liberalisation, the former Uganda Posts and Telecommunications Corporation was split into separate entities offer telecom and postal services. According to UCC, the industry has since evolved to employ over 3,000 people directly and indirectly.
The biggest chunk of investment in the industry has gone into network building, in which telecom companies account for over 75 per cent of the money.
Market leader MTN has spent close to $270 million, while Zain, Uganda Telecom, Warid and Hits Telecom have invested a combined figure of over $400 million.
As a result, most towns and urban centres now have access to phone signals as competition drives operators to venture into parts of the country that were previously not considered viable for investment, pushing network coverage to at least 80 per cent of the country, according to the regulator's records.
But 50 operators in the telecommunication services sector -- mainly mobile telephony for voice and data, Internet services and distribution of telecom products, and to a small extent landline and payphone services -- suggests that the sector is too liberalised, and could well get overcrowded if all licensees rolled out commercial operations.
For instance, out of more than 30 companies licensed to do voice, data and capacity resale, only 11 are providing services currently.
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