1 November 2017

Uganda: Simcard Registration Dividends

Kampala — Telecom firms now feel confident in carrying out their business following the conclusion of a mandatory Simcard registration and validation on August 31, 2017, according to Godfrey Mutabazi, the executive director at the Uganda Communications Commission.

In an exclusive interview with The Independent on Oct.19, Mutabazi said, apart from managing security - which was the major objective of the exercise - telecom firms are now better positioned to offer numerous services including micro-credit to customers without asking for collateral because they know their customers well.

He said the country's total registered mobile subscribers stands at 23.5million across the eight telecom firms.

"We have done very well; as we speak now everybody is registered," Mutabazi said.

Uganda embarked on Sim card registration nearly five years ago but the exercise was delayed until the government introduced national identity cards in 2014 for clear identification of customers.

Mutabazi said UCC and telecom firms are now able to trace individuals who commit crimes using their mobile phones.

He also noted that with Simcard registration, SIM card boxing or grey traffic which involves incoming international calls into the country without paying excise duties to the government, has reduced as fraudsters now fear that they can easily be netted.

He said this vice affects so much the big players in terms of revenue losses in addition to loss of government excise duty.

But he said telecoms have reported to him a significant reduction in traffic caused by SIM boxing.

"UCC has engaged the operators and advised them to buy Fraud Management and Revenue Assurance Software which both MTN and Airtel have done to be able to dismantle SIM card boxing," he said. "The other players are expected to do the same."

International studies have indicated that network operators lose about 3% of the annual revenue due to fraudulent and illegal services.

The Communications Fraud Control Association (CFCA), states that telecoms lose over 15 % of their interconnection termination revenue through SIM boxing.

Some researchers put the total global losses from the underground mobile network industry at US$58 billion in 2011.

With this software, Mutabazi said, MTN and Airtel are creating industrial blacklists for numbers that are found to be SIM boxing and thus complementing UCC's recently procured monitoring equipment to monitor all telecommunication services including tariff charges to avoid customer's complaints over loss of their airtime.

Telecom executive's raises concern

Anthony Katamba, the general manager for Legal and Corporate Affairs at MTN told The Independent in an interview on Oct. 20 that while they are following the legal provisions by government to register all their customers both new and old, a directive by the government to restrict SIM card sales in designated places - service centres and kiosks - would slow growth of Sim card sales.

This has also been made worse with the difficulties that people have to go through to get national identity cards in order to acquire a SIM card.

"Sales are a function of availability," he said, "But we are following the rule from government."

Africell's Commercial Director, Milad Khairallah told The Independent on Oct. 20 that he agrees with UCC and other players on the issue of growing confidence amongst players while transacting with their customers because of the SIM card registration exercise that captures details of users.

Without giving specifics, Khairallah said they had registered part of the 300, 000 SIM cards that were switched off on August 31 because of lack of registration details by owners.

According to government officials, the enactment of the Registration of Persons Act 2015 makes the national ID a mandatory document to use for any form of registration services, SIM card registration inclusive.

This is explained in sections 65 (1) (a) to (l) and 66 (1) and (2) that elaborate on the use of information in the register and mandatory use of National ID cards respectively.

This meant that telecom subscribers who didn't have national ID were unable to register their SIM cards. To some players, this meant decline in revenues in some ways.

By close of deadline on August 31, 2017, UCC and the office of the Prime Minister reported that 98% of the SIM cards had been successfully registered and were compliant.

But Mutabazi said that the 2% that was not registered by end of August was insignificant going by industry operations.

He said that there are users who voluntarily got off some networks because they had more than one SIM cards.

"Let's not focus on unregistered users because if you are a serious user, you must be registered," Mutabazi said. "We have not lost numbers in terms of volumes," he added.

Meanwhile, Mutabazi said that it is possible for big players to lose some revenue because they have the largest number of subscribers compared to small players who would easily deal with their loyal customers.

Commenting generally on the quality of service, he said it is currently UTL that is grappling with poor services but set to improve following the government's move to take-over its management in March this year.

"Quality of service is a big concern but it shouldn't be overwhelmingly a big problem as of now," Mutabazi said, adding that in any case, there are more players in the market providing an alternative choice.

Future outlook

Going forward, Mutabazi said that the country is moving towards the fourth industrial revolution and that it would be very dangerous for Uganda not to invest so as to move fast in communication technology.

"We must keep pace with the speed of changing technology as a region and continent so that we don't remain behind," he said.

He said the regulator is happy that MTN has earmarked US$70-80 million worth of investment in new technology and other areas.

He added that government needs to study its policies on taxation, energy and other infrastructure so as to support growth in communication services.

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