Thursday, September 23, 2010

Warid Tariff Cuts Could Open Price War in Uganda

The mobile telephone industry in Uganda appears headed for a new price war after Warid Telecom announced it was slashing the cost of its cross-network calls to Shs5 (USD 0.023) per second.

Warid Uganda CEO Madhur Taneja said yesterday that the new rate, which is half of what the company charged previously, was aimed at reducing the cost of telephone calls.

“High mobile cross-network tariffs have been a barrier to mobile users but we want to break that obstacle by offering the lowest rate in the market,” he said.

The industry average for cross-network calls, which means calls made from one network to another, is around Shs10 per second or Shs300 (USD 0.13) per minute and Warid’s new price, which the firm says is permanent and makes it the cheapest in the market, is likely to draw a response from other players.

Rival firms were non-committal about what kind of response would be forthcoming. Isaac Nsereko, the chief marketing officer of market-leader MTN Uganda, told Daily Monitor  newspaper in a telephone interview that the Shs5 tariff was not a “big deal” and that MTN charges as low as Shs4.5 per second for calls within its network on its discount promotion and Shs5.5 per second to other networks.

Ms Cesear Mloka, the marketing director of the second-largest player Zain Uganda/Bharti Airtel, declined to comment when contacted.

However, Zain today introduced a bonus offer where prepaid subcribers earn bonus credit equivalent to 50% of credit recharge.  The bonus can be used only for calls to another Zain line.

Zain Kenya recently led a price war in that market that was followed by a swift cutting of call rates to as low as Uganda Shs75 per minute across all networks. The uniform call rate in Rwanda is about Uganda Shs270 per minute while in Tanzania it’s about Uganda Shs7.5 per second.

The local telecoms industry has already been rocked by the slashing of call rates within networks with different firms charging a flat fee of between Shs1,500 – Shs2,000 for 24 hours of unlimited calls.

Dual phone craze
The higher cross-network call charges have, however, forced many subscribers to buy more than one sim-card to allow them call cheaply within one network and then swap cards when they need to call other networks. It has also boosted the sale of dual sim-card phone handsets.

Warid, Orange and Uganda Telecom are currently offering new subcribers phones whith dual-sim capability.

Uganda Communications Commission, the industry regulator, recently announced a reduction in the ceiling of interconnection fees from Shs180 to Shs130 per minute where firms fail to agree bilaterally.

The industry has also seen a dramatic fall in data prices following the landing of undersea cables on the East African coastline which brought broadband internet, but the competition here has mainly been between MTN and Orange Telecom.

--Daily Monitor

No comments: