9 April 2012

Uganda: Country Set to Revise Mobile Interconnection Fees Downwards

Kampala — Uganda is expected to revise downwards the interconnection fees paid between telecom companies' to Ush98 from Ush131 starting May 1, 2012.

This is expected to go down to Ush84 in May 2013 and Ush73 in May 2014. According to the Uganda Communications Commission, it will bring down further the calling tariffs for mobile phone users.

Most mobile companies charge Ush4 per second or Ush240 per minute, which is still expensive according to sector analysts.

Mr. Alastair Macpherson of PriceWaterhouseCoopers, who did a survey to find out the viability of revising the interconnection rates, found that the fees can even go down further if the rate of inflation is not very bad.

"For example, we found that interconnection can go down further to Ush90 this year, Ush70 in May 2013 and Ush54 in May 2014, if inflation is very low," Macpherson told a public dialogue in Kampala last week.

Many telecom companies have agitated for the revision downwards of the interconnection charges with only the country's giant telecom operator MTN still opposed to the downward trend. They argue that the downward trend may make the investment climate unproductive.

"This is a very good initiative. We think it will create fair competition in the industry," noted Mr. Edouard Blondeau the Orange Uganda Chief Strategy Officer.

Interconnection is a vital mechanism that allows mobile connection between different telecom operators.

According to Macpherson, one of the key enablers for open and fair competition is an effective cost reflective interconnection regime. It is enshrined in the Ugandan law which requires that interconnection rates be cost oriented.

He adds that in 2009, the Uganda Communication Commission instituted an interconnection study by pricewaterhousecoopers, to determine the interconnection rates for Uganda.

"Since then, there have been changes in the Ugandan market in terms of technologies that are used, services that are offered and demand, as well as changes in the global financial markets which have an impact over inputs such as the cost of capital," stressed Macpherson.

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