10 January 2013

Uganda: K2 Aims for Cheapest Calls

K2 Telecom, the latest telecom company in Uganda, says it recorded 60,000 customers in its first week of operation.

K2 was launched on January 1, during the Buganda end-of-year celebrations, Enkuuka y'omwaka, at Lubiri grounds in Kampala. The Buganda King Ronald Muwenda Mutebi II launched the network. Many people have linked the telecom company to Buganda kingdom, but Chief Executive Officer Saul Ssegawa Katumba says this is only speculation.

He told The Observer, that like any other new venture on the market, such speculation is understandable but untrue. He admits that Buganda's investment arm considered entering the telecom industry but had no money, with individuals jumping in to buy shares in K2. K2 enters a market notorious for dropped calls and other network interruptions, which is perhaps why Katumba quickly declares: "Our network is of very good quality."

K2 also makes its entry at a time when the competition between the different players is intense, with a lot of confrontations on the interconnection fees and sharing of network infrastructure. Already, K2 is experiencing the challenges that come with intense competition. For now, subscribers of K2 telecom cannot make calls across networks. K2 officials say they are still haggling with the other network operators on the interconnection fees to allow calls across networks.

This is not new. Companies like Warid faced it rough in their early days, with older players reluctant to share their network infrastructure like masts. K2 had set the price for calls to other networks at Shs 150 or two and half shillings per second, said Katumba, with the assumption that they would find it easy with the other telecom firms when it came to setting the interconnection fees.

This rate would arguably have been the cheapest rate in the market. However, with the intense lobbying that K2 officials are engaged in, that figure is likely to go up after factoring in the new interconnection fees. Much of the attention will be on K2's strategy. The key issues for consumers is likely to be K2's call rates, and if there are any promotions of free calls. When Warid came into the market in early 2008, it kicked off with its Bang KB for free promotion.

Katumba said they have plans to roll out promotions in the future. For now, he said, they have some of the cheapest intra-network rates in the market -at Shs 100 per minute and Shs 40 per text message.

"Our target is the mass market, the young people who form the biggest clientele of the telecom market. They want fair rates, and a better service; this is what we are offering them," Katumba said.

Consumers will also watch K2's strategy for data services. Firms like Orange have made the data market their key resource base. With the growth of social network platforms like Facebook, Twitter, and other chatting platforms like WhatsUp, many Ugandans are increasingly demanding for reliable phone internet services. On their website, K2 telecom notes: "We will give you the fastest internet speeds in the country."

And then there are the money transfer platforms, where customers can pay their utility bills and send and receive money easily, especially without going to crowded banking halls. K2 says it will eventually join the mobile money fray.

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