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Getting unwired in East Africa Michael Minges, ITU minges@itu.int The views expressed are those of the author and may not necessarily reflect the opinions of the ITU or its Members.

PARTNERSHIPS & RURAL TELECOMMUNICATIONS DEVELOPMENT Kampala, Uganda 3-5 November 1999


Partnerships & Rural Telecoms, Kampala, November ‘99

Mobile cellular in East Africa Start-up: Subscribers: Penetration:

6/95 26’000 0.15%

Start-up: Subscribers: Penetration:

1992 7’300 0.02%

Start-up: Subscribers: Penetration:

9/94 38’000 0.12%

Data at December 1998.

Uganda

Kenya

Tanzania


Partnerships & Rural Telecoms, Kampala, November ‘99

Mobile growth New telephone subscribers, East Africa (000s) * 50 45 40 35 30 25 20 15 10 5 0

Telephones per 1'000 people, East Africa * 6

Mobile Fixed

Fixed

5 4 3

6x

50x

2 1

1996

1997

* Kenya, Tanzania and Uganda

1998

0 1996

Mobile 1997

* Kenya, Tanzania and Uganda

Source: ITU.

1998


Partnerships & Rural Telecoms, Kampala, November ‘99

Substitution Quick to implement Low connection fee Generally little wait for service Functionality advantages

Mobile cellular as % of total telephone subscribers, 1998 35

Uganda

Tanzania

Kenya

Source:ITU.

24

3


Partnerships & Rural Telecoms, Kampala, November ‘99

Strategic foreign investors Country

Mobile Operator

Foreign Investor

Share

Tanzania

MIC

Millicom (Luxembourg)

57%

TriTel

TRI (Malaysia)

60%

CelTel

Vodafone (UK)

37%

MTN

MTN (South Africa)

50%

Telia (Sweden)

30%

Uganda

Source: ITU.


Partnerships & Rural Telecoms, Kampala, November ‘99

Prepaid Provides access to those who might not normally qualify Accounts for majority of new subscriptions Operator avoids bad debt

MIC Tanzania Prepaid subscribers, 000s As % of total cellular subscribers

72% 54%

25

79%

30

42%

18% 0%

11

14

3

Jun- Sep- Dec- Mar- Jun- Sep98 98 98 99 99 99 Source: MIC Tanzania.


Partnerships & Rural Telecoms, Kampala, November ‘99

Roaming Extra revenue source Can help spur regional integration Not widely implemented

Roaming agreements Tanzania (Tritel): 4 Uganda (MTN): 5 Kenya: 0 Note: No Tanzania-UgandaKenya roaming!!!


Partnerships & Rural Telecoms, Kampala, November ‘99

Mobile cellular licenses How many

– How many operators can market bear?

How long

– Time period of license

How much

– License fees will be passed on to consumers

How about

– Coverage obligations – Technology – Scope


Partnerships & Rural Telecoms, Kampala, November ‘99

Market structure Private sector – Tanzania & Uganda – Kenya from 2000

Competition – Tanzania since 1996 – Uganda since 10/98 – Kenya from 2000 Number of mobile operators with license or to be licensed

Cellular market structure Uganda

 

Kenya

 

Tanzania

  Source: ITU.

Number of mobile operators in operation


Partnerships & Rural Telecoms, Kampala, November ‘99

Universal access obligations: Coverage Coverage typically limited to major towns Licenses should be linked to coverage targets Global mobile satellites may help

MTN Uganda: Mobile cellular coverage

Source: ITU adapted from GSM Association.


Partnerships & Rural Telecoms, Kampala, November ‘99

Tariffs Still high relative to fixed and compared to other regions Biggest barrier to mobile access Reasons why – “High retention” – Interconnect charges – Handset & service provider subsidies

Cost based tariff: US$ 15/month

Mobile cellular tariffs, 100 minutes, US$, '99

Kenya

Tanzania

Uganda

$41

$51

$33

Source: ITU adapted from published operator tariffs.

Times Fixed Tariff

6.6

6.5

1.5


Partnerships & Rural Telecoms, Kampala, November ‘99

Competition in Uganda Cellular subscribers in Uganda

80

70'000

70

60'000

60

50'000

50

40'000

40

30'000

30

20'000

20

10'000

10

0

0 1996

1999

Source: ITU adapted from company information.

MTN CelTel Foreca st

Forecast

19 97 19 98 '9 /9 9

80'000

19 95 19 96

CelTel Mobile Tariffs 100 minutes per month US$ 90


Partnerships & Rural Telecoms, Kampala, November ‘99

Handsets Factors affecting handset prices: – Custom duties – Distribution policy – Subsidies


Partnerships & Rural Telecoms, Kampala, November ‘99

Forecast Fixed and mobile telephone subscribers (000s) 450

Kenya

250

250

Tanzania

Uganda

400 350 300

200

150

150

100

100

50

50

0

0

Fixed

250 200 150 100 50

200

Mobile

0 91 94 97 00 03

93 96 99 Source: ITU.

2

5

94

97

0

3


Partnerships & Rural Telecoms, Kampala, November ‘99

Conclusions Mobile cellular enhances access to communications Must not be viewed as service for privileged Requires regulatory encouragement to extend access to all

ŠITU / A. de Ferron


Partnerships & Rural Telecoms, Kampala, November ‘99

World Telecommunication Development Report 1999  Theme: Mobile cellular  Publication launch: TELECOM ‘99  Available on paper and PDF  Website: www.itu.int/ti/publications/ wtdr_99/wtdr99.htm



Getting Unwired in East Africa