Global Insight Perspective | |
Significance | This comes after the UCC awarded a third unified licence to Warid Telecom in December 2006, under the scope of which the company plans to offer mobile services. The key issue for both HITS Telecom and Warid Telecom, however, is obtaining authorisation from the UCC to build new GSM infrastructure. |
Implications | HITS Telecom will enter the Ugandan market as it enters a new phase of liberalisation—with 2.241 million mobile subscribers by September 2006 (source: UCC), there was a mobile penetration rate of 7.95%. |
Outlook | HITS Telecom will enter the market in competition with MTN Uganda, Celtel, and UTL. Warid Telecom, meanwhile, is expected to launch services later this year. |
House for Integrated Technology Systems (HITS) Telecom, based in Saudi Arabia, has been granted a licence by UCC which, according to reports, will enable it to offer mobile services. A 25% stake in the venture has been granted to a Ugandan firm called Veritus Communications, according to Reuters. It is not clear at this stage exactly which licence, or which frequencies, HITS Telecom has been granted. The operator plans to launch a GSM network, but according to Panapress is "yet to be allowed to build new mobile infrastructure".
The company’s CEO, Edwin Rodwell, said that HITS Telecom plans to launch services by November 2007, that the operator would be linked to the national fibre backbone currently under construction, and that it would also extend coverage to rural areas. HITS Telecom is reportedly in negotiations with the existing operators to share network infrastructure, but also plans to build out its own network infrastructure as well. According to New Vision newspaper, the company intends to invest some US$150 million in 2007.
HITS Telecom also has investments in Yemen, and according to New Vision also has licences in Nigeria and the Democratic Republic of Congo. In Yemen, HITS holds a stake in the third mobile operator HITSUnitel (see Yemen: 6 November 2006: Syriatel Buys Stake in Yemeni Mobile Operator Unitel).
Outlook and Implications
Like Warid Telecom, HITS Telecom will enter the Ugandan market as it enters a new phase of liberalisation. Following the end of the extended five-year exclusivity granted to incumbent fixed-line operator Uganda Telecommunications Ltd (UTL) and to second national carrier MTN Uganda on 25 July 2005, the regulator has implemented a new licensing regime. In June 2006, the regulator issued new unified licensing guidelines under which UTL and MTN hold the first two of these “unified” licences. These licence-holders will be permitted to establish and operate national infrastructure until 2010, at which point the market is to be fully liberalised. Furthermore, from July 2006, the UCC also intended to grant unified licences to what it calls “area” licencees, for those areas in which the national operators have been unable to roll out infrastructure or services (see Uganda: 21 June 2006: UCC Issues Unified Licensing Guidelines in Uganda).
The third national unified licence was issued to Warid Telecom in December 2006. Warid Telecom plans to offer mobile services under the scope of its unified licence, and indicated at the time that it plans to invest some US$200 million with the aim to have an initial capacity of 1.5 million subscribers rising to some 4.0 million subscribers within three to five years (see Uganda: 11 December 2006: UCC Awards Mobile Licence to Warid Telecom). As with HITS Telecom, Reuters reports that although it plans to invest substantially in new network roll-out, Warid Telecom’s licence to build new mobile infrastructure is still pending. Warid Telecom International, based in Abu Dhabi, has embarked on a phase of international expansion into developing telecom markets and in the last two years has won new operating licences in Pakistan, Bangladesh, Congo, and now Uganda.
The entrance of new operators is expected to increase competition, and with it penetration levels. There were 2.241 million mobile subscribers by September 2006, equivalent to a penetration rate of 7.95%, which had risen to 2.698 million by 31 December 2006 (source: UCC). Market leader MTN Uganda reported 1,403,000 subscribers as of 30 September 2006, equivalent to a market share of 63.5%. Celtel, the second-placed operator, had 381,000 subscribers, and UTL had 457,272.