18 April 2017

Uganda: Telecom Sector Needs Fewer Players for Better Service Delivery - MTN CEO

It's coming to year since Wim Vanhelleputte became Chief Executive Officer of MTN Uganda. He spoke to The Independent's Julius Businge about his experience so far and his plans for MTN operations.

What has been your experience so far since you were appointed to head MTN Uganda?

The experience has been good because Uganda is my other home. I have a family connection here. After many years of working abroad, it is exciting for me to be in Uganda. I have been with MTN for nine years and I can tell you MTN Uganda is a great company with exciting employees and customers.

Historically, MTN has led in unveiling new solutions - talk of mobile money and micro loan facilities and other offers - how has this affected your work?

If the market has recognised us as leaders in innovation, it means whoever is using MTN knows they will always be the first to benefit from our service. This situation benefits both MTN and our customers. Going forward, we will continue to innovate new products mainly using our mobile money platform and other services in the sector. Of course this lead puts us on pressure to remain number one because the others are trying to challenge our position. Once you have that number one position, it is better to keep it rather than to gain it. Competition forces us to keep on reinventing ourselves.

The Uganda Communications Commission, the sector regulator is imposing a 10% fine (on gross revenues) on operators facilitating communication involving unregistered Sim cards. Why are operators not respecting the sector's legal framework?

From now onwards it will only be the National Identity Card or valid passport required for us to do registration of SIM cards for our customers. Before that, there were using many documents that were allowed to us to register the SIM cards. We are a 100% compliant to this new directive from the regulator and whoever is to buy our Sim card is being engaged to do the right thing. Concerning the penalties, today, we don't have any unregistered Sim cards active on our network. We did the cleanup exercise in December 2015 and we had to disconnect quite a number of customers and requested them to come to our offices for the reconnection. We currently have 11 million subscribers and all are registered. We only disconnected around 2 million subscribers in December 2015. Now we have not disconnected anyone because the cleanup exercise was done almost one and a half years back.

There has been talk of decline in revenues from the voice segment and limited revenue growth on the data segment. Describe the situation now.

It is very competitive. On the voice we have two major operators. The others are struggling. But on data we have five or six operators and when you add smaller Internet Service Providers, you are talking of 15 competitors on data. I think there is need for rationalisation and consolidation of the sector. There are too many players holding very important valuable spectrum and not optimally using it. In other markets there are three or four operators with spectrum which makes it easy for strong players to offer quality services at affordable cost with good amount of spectrum. The more spectrum you have, the more efficient you would be when it comes to service delivery. As MTN we need more spectrum. If four or five can be allocated sufficient spectrum, it will be a game changer in terms of data profitability and data pricing. The other thing to look at is devices - smart phone penetration is low (15% currently), we should be at 40% or 50% and above. We need innovative ways with tax authorities on how to reduce VAT and customs duties to make data enabled 3G devices more affordable to drive uptake of data so as for prices to go down. We don't have enough frequency or spectrum to rollout our data services to as many parts of the country as possible on the data front. That said, this year, we are rolling out 100 new sites upcountry in areas that are completely not covered with our network. We want to continue being the biggest network in terms of coverage. MTN must be everywhere you go.

The Capital Markets Authority is pushing for a law to make players in the services sector list on the Uganda Securities Exchange. Will MTN list?

We are not against such initiatives. At the end of the day, these are shareholder discussions. I am not a shareholder. I don't have a particular view on that. Of course there are many markets in Africa where this is happening. In Kenya, Safaricom is listed and Tanzania has made it now mandatory for companies like ours to list. I think Rwanda, Zambia, Ghana, Nigeria, Ivory Coast are all looking at this. There is a trend of looking at local listing. What I know is that, we will comply if there is any obligation. This is a hot topic on the continent.

How has MTN Uganda managed under slow economic growth for the last five years with average GDP growth below 5%?

Even 5% growth rate is not bad. There are countries that would be extremely happy if they can get that 5%. I know growth here has somehow slowed down in the last five or so years. But for us in the services sector, we are not always too much directly impacted by those figures because it is about consumer spending. As you can see, we are innovating every other day to tap into more revenue streams instead of complaining about the economy performance. Through innovations you can be able to deal very well with macroeconomic challenges and beat competitors.

MTN mobile money operations in Uganda have substantially boosted your revenue performance since its launch in 2009. What new innovations are you planning for this platform apart from the six months old MoKash service?

Our innovations are going to be more focused on mobile money. We launched Mokash in August 2016 which has been successful. MoKash loan comes without any collateral or guarantee. We just urge our clients to meet their obligations on time so as not to punish the other users wanting to use the service. At the moment, more than 95% of our MoKash clients are 100% compliant. There is a 5% default rate which is not good. We are now looking at products that can enhance MoKash, for instance by looking at longer periods for loan repayment, higher amounts to lend especially to support more businesses and entrepreneurs. We will soon launch a product where customers can borrow through mobile money to buy specifically smartphones, which will help increase smartphone penetration and data usage. Every year MTN invests up to US$ 60 million for better service delivery in our network.

What else stands out for you about Uganda's telecom sector as head of MTN?

The sector is in transformation. You are moving from voice to mobile money and data business. That is very exciting for us. Over the last 10 to 15 years we have been making much money out of voice but over the last 2-3 years, we have shifted to data and more mobile money, which are becoming more important. If you are to compare us with Safaricom in Kenya, you will realise they are making more revenue out of none voice yet for us, we are making more revenue out of voice as opposed to none voice. But anytime soon we will be making more revenue from data and mobile money and other components and less from voice.

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