CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
by Peter Bahemuka, Uganda, August 1999
THEME = DEVELOPMENT
With a population of over 20 million
and with about 56,000 operational telephone subscriber lines,
Uganda still has one of the lowest telephone penetration rates in the world.
But the liberalisation of the telecommunications' industry,
with new telephone servers, millions of dollars of investment
and the purchase of new equipment, has begun to change this
In 1996, the Uganda government issued a telecommunications sector policy document, setting out short and medium objectives for the sector. These included: increasing the teledensity from 0.25 lines per 100 people to at least 2.0 per 100 people over a five- year period; improving facilities and services; introducing new telecommunications services like e-mail; increasing the geographical distribution of telecommunications services throughout the country, so as to ensure a balanced and well-coordinated telecommunications network, through appropriate licensing, regulation and standardisation.
Targets set included: increasing call completion rates from 35% to 65%; improving fault recovery to 60% within 24 hours, and 95% within 72 hours; up-grading the national network to achieve 75% digitalization in five years; increasing subscriber lines to a minimum of 300,000 main lines in a five-year period; improving pay- phones and public call offices and other appropriate services in rural; areas; improving connection time for new applicants.
The state-owned Uganda Posts and Telecommunications Corporation (UPTC), a monopoly until 1996, was restructured, and its telecommunications were vested in the newly created company, Uganda Telecoms Limited (UTL). The government's controlling interest in UTL had been scheduled to be sold by tender by the fourth quarter of 1996. More about that later on! Also, the government's privatisation programme, carried out by the Privatisation Unit (PU), was particularly targeting experienced telecommunications network operators and providers of public telephony, as well as institutional investors and others.
The government's first priority in its restructuring programme, was the provision of a licence to a strategic investor or consortium of investors, for a second network operator (SNO), to compete with UTL. The SNO would develop new telecommunications networks and services, including local, long-distance, international and cellular communications, plus Internet access, e-mail, voice mail and other specialised services. The SNO had to agree to minimum rollout standards in terms of geographical coverage and quality of service, and would interconnect with the UTL network.
The Uganda Communications Commission (UCC) was created to protect consumer interests, set maximum prices for telecommunications and promote fair competition in the sector. The UCC is also authorised to review the achievement of performance targets by both UTL and the SNO, although licences for both companies were granted for a sufficiently long period for both operators to recoup their investments.
Since 1995, the telecom landscape in Uganda has changed with the entry of new key players. Ten public pay-phone licences have been granted in the telecommunications industry. Starlight Communications Ltd,a joint venture between Starlight Communications of the USA and Uganda, started providing pay-phone services, international private lines and e-mail services in 1995. Last year it merged with Infomail, to form Infocom, the leader of the seven Internet providers in Uganda. There are now three paging service providers - up from two in 1996.
Then came the Mobile Telephone Network (MTN) Uganda, which was licensed in 1997, together with the SNO, to provide local, national long-distance and international telephone services. This is a consortium headed by MTN of South Africa and Telia of Sweden. MTN has spawned a revolution in the telecommunications sector in Uganda. On its first day of business on 21 October 1998, over 4,000 customers signed up for its mobile telephone services. Also, prices for local calls dropped drastically. MTN also introduced the "Pay As You Go Package", in which all the customers needed was a card to insert in the telephone, and thus didn't have to wait to get connected. This forced Celtel to introduce its version of the "Cash and Talk" package. Subsequently, customers can now use both cards on one handset.
After MTN's entry into the market, the chairman of the UTL's board of directors, Patrick Kabonero, said that the company would concentrate on taking corrective measures to improve services. He said that in the past (as with the UPTC), the company had a very bad image especially in poor billing, phone-line tapping and inadequate fault rectification.
We have already mentioned that the government's controlling interest in UTL was due to be sold by the fourth quarter of 1996. But this privatisation exercise has been a long and dogged one. A bid by a Malaysian company, Telekom Malaysia Berhard, was cancelled in 1998 because the company had taken advantage of the failure of other bidders to present realistic offer prices, to quote an abnormally low price.
On 2 November 1998, the Divestiture and Reform Implementation Committee (CRIC) authorised the pre-qualification of two consortia for the purchase of a majority stake in UTL. One was with World Tel (an international investment fund); the other with Saskatel International Ltd of Canada (which owns the telecommunications network in the Province of Saskatchewan and has been involved in numerous international telecommunications projects).
But, on 16 November 1998, the government announced that this had only attracted one bidder, World Tel, which offered US 23 million for 51% of UTL's shares. However, this tender also collapsed in May 1999, and the government has re-tendered the sale of UTL.
With all this, readers will appreciate the Uganda's telecom sector is indeed in the throes of a revolution!
END
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PeaceLink 1999 - Reproduction authorised, with usual acknowledgement