Telecom price war to affect taxes and service quality

A REDUCTION in revenues to the treasury and possible consolidation in the telecom sector will follow in the wake of the current price war, triggered two months ago by Warid, industry watchers have said.

In the latest round of cost cutting MTN has offered calls at a shilling a second to new MTN subscribers. Under the new scheme a subscriber will buy three Sim cards and create his own network with two others to enjoy the rock bottom tariff.

Almost simultaneously Warid announced their Kawa promotion that promises calls at one shilling per four seconds.

This race to the bottom was prompted by the entrance in April of Bharti Airtel, after the Indian firm bought Zain’s Africa operations in 15 countries.

Bharti Airtel, the fifth largest mobile phone company in the world with 190 million subscribers, is the leading telecom company in its home market accounting for just under third of all subscribers.

No one from Zain was available to comment on the subject but industry analysts point to Bharti’s economies of scale and its business model where everything except marketing, sales and finance are outsourced will be key in their driving prices down.

The price war has halved tariffs and leading to longer and more frequent calls.
“We are experiencing an increase of 26% on minutes of use per day meaning people are calling more. The number of callers form other networks too has increased especially Warid,” Mark Kaheru, the Uganda Telecom public relations, said.  Read more….


One Response

  1. I think there is also a bit of money to be made in the private sector, from this price war. So, taxes may drop only as a result of the money moving to businesses that the URA cannot quite target as effectively.

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