9 January 2018

Rwanda: Airtel Takeover of Tigo Rwanda Operations Jolted Telecom Sector

The Rwandan telecom sector was mid-December jolted by news of Bharti Airtel takeover of Tigo Rwanda operations. The development is arguably the biggest in the telecom industry that has been dogged by slow growth levels over the past few years.

With three players, most experts were, on many occasions, quoted saying that the market was "crowded".

So the take over of Tigo by Bharti Airtel, an India-based global telecom giant and the parent firm of Airtel Rwanda, was long overdue, according to pundits.

On December 18, 2017, Bharti announced it had signed an agreement with Millicom International Cellular S.A to take over Tigo Rwanda operations, which is currently the second biggest telecom firm in the country by market share.

The deal means that Airtel will leapfrog current market leaders MTN in terms of market share once the agreement is approved by Rwanda Utilities Regulatory Authority (RURA).

Currently, MTN Rwanda commands 42 per cent of the market share, Tigo 40 per cent and Airtel 18 per cent as at November 2017, according to the RURA active mobile subscriptions monthly report.

Though MTN slipped in dominance in October 2017, the firm regained its position the following month.

Rwanda's mobile telephone penetration rate was at 75.5 per cent, while the total number of active mobile telephone subscriptions were 8.70 million over the reporting period.

Meanwhile, the sector continued to post strong growth as shown by the its contribution to the national GDP despite challenges like low user spend.

Anthony Kulamba, the RURA head of media regulation and consumer affairs, attributed the growth to "professional" regulation of the sector.

"The ICT sector continues to experience a significant growth as a result of a conducive legal and regulatory framework in place," Kulamba said.

He added that RURA also closely monitors the quality of services offered by the providers to make sure consumers get top-notch services and the providers adhere to the set standards.

MTN Rwanda returned to profitability during 2017 on the back of increased returns from its Mobile Money service. This was despite the $8.5 million fine slapped on the telecom firm by the regulator for nonconformity to its licence guidelines.

MTN had said it would complete payment of the fine by December 31, 2017. The firm's Mobile Money service revenue grew 45 per cent year-on-year, while data and voice both added over 30 per cent.

MTN shares are listed on the local bourse through Crystal Telecom, which floated its 20 per cent equity in the telecom on the exchange.

The firm was confident on surpassing revenues of Rwf90 billion in 2017, up from about Rwf77 billion the previous year.

Tigo and Airtel performance figures are not readily available for public perusal as they are not compelled by law to do so unlike their competitor MTN whose stake is trading on the Rwanda Stock Exchange.

Mobile internet rules

Of the 4.99 million total number of internet subscribers, over 4.03 million of them access it on their mobile devices.

MTN leads with over 2.49 million users, Tigo 1.78 million and Airtel 695,502 mobile internet subscribers. There are presently over 8.70 million mobile phone users, indicating a penetration rate of 75.5 per cent.

Meanwhile, Rwanda's 4G long-term evolution broadband has already been deployed in all the districts of the country, according to KT Rwanda Network, a firm charged with implementing the broadband project.

Latest figures from the firm indicate that the 4G internet network cover 95 per cent countrywide. The firm is also wholesaler of 4G internet.

There are also other initiatives geared at enhancing connectivity and reliability. Liquid Telecom, for instance, continues to expand its FttP services across Kigali and a number of other towns. This was boosted by increasing investor appetite, to inject more resources into the sector.

Infrastructure development in the sector has boosted the number of fixed telephone subscriptions which surged by 44.9 per cent during the third quarter of 2017, hitting 12,645 compared to 6,960 recorded in the second quarter of last year.

Regional blocs scrap roaming charges

Going into 2018, it is going to be easier and more affordable for Africans across 40 countries to use voice and SMS services after members agreed to abolish roaming charges.

The Common Market for Eastern and Southern Africa (COMESA), Economic Community of West African States (Ecowas), Southern African Development Community (SADC) and the East African Community (EAC) blocs worked out a mechanism that will see up to 40 African countries harmonise roaming charges across the board this year.

Airtel unveils innovation hub at UR Huye campus

Airtel Rwanda signed a deal with University of Rwanda Huye campus where it launched an innovation hub at the College of Arts in Huye District.

The fully-equipped e-lab seeks to promote innovation and internet-based research among students.

Supporting cashless economy

The telecom sector has contributed greatly to efforts geared at deepening the financial inclusion and attainment of a cashless economy in Rwanda.

Already, a number of banks and telecom firms have formed partnerships to deliver mobile financial services, including e-payments and money transfer services.

The Push&Pull service, for instance, enables mobile money subscribers of different telecom firms to deposit and withdraw money electronically from Cogebanque on their mobile devices.

The development has been touted by experts for helping boosting transaction efficiency and convenience by allowing clients to transact seamlessly on the platform.

Things can only get better with more banks embracing mobile banking, while government agencies and businesses are promoting e-payments to cut operational cost.

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