Uganda has some of the cheapest mobile data and prepaid voice prices of any African country, thanks to increased competition in the telecom sector.
Data from Research ICT Africa shows that 1GB of mobile data in the second quarter of this year was cheaper in only Tanzania, Egypt, and Mozambique. The average cost of the plan was $3.62 in Uganda (Shs12, 545.83), versus $0.89 in Tanzania, $2.82 in Egypt, and $2.87 in Mozambique.
On the other hand, the cheapest mobile prepaid voice product – which includes 30 calls and 100 SMS per month prepaid- was in Uganda at $1.51 (Shs5, 233.21). Tunisia and Ghana had the next lowest products, at $1.97 and $2.16 respectively.
Mobile data prices in Uganda dropped in the second quarter of 2015 to $3.97 (Shs13, 758.83) from $5.24 (Shs18, 160.27) the previous quarter. They fell again in the Q3 2015 to $3.45 (Shs11, 956.66), and have been rising incrementally since then.
The fall in Q2 was because of a new entrant, Vodafone Uganda, which launched operations in February 2015. Vodafone’s entry strategy was built on very competitive unlimited data plans. To compete, other telecoms had to cut prices.
MTN reduced its data prices in June 2015. Africell Uganda followed, introducing three unlimited data plans and reducing prices of most of its internet bundles in October 2015.
In September 2015, the two largest voice providers – MTN and Airtel – also slashed voice tariffs to about Shs3 per second from Shs5.5 per second.
These low prices – at least compared to other African countries – are responsible for Uganda’s third rank in the value for money index, which computes the value of combined data, sms and voice packages on offer. Uganda scores 8.29, which means that a smartphone user gets 8.29 times the value of the bundle offering; only Cape Verde (8.83) and Morocco (10.32) score higher.
Uganda has increased competition – or rather, the entry of new players – to thank for the lower prices. This is especially true in the data segment, which is more competitive than voice. In addition to Vodafone and its effect on data prices, relative newcomers Africell Uganda (which acquired Orange’s Uganda operation in November 2014) and Smart Telecom – which launched commercial services in March 2014 – have some of the most competitive data prices.
The competition in voice is still between the two main players, MTN and Airtel, so much that a move by one was matched by the other in less than a week. MTN’s market share was 52.7% as at the end of this June, according to financial statements by parent company, MTN Group. The three newest entrants, according to the World Bank, had a combined market share of just 1.6% in 2015.
In any case, revenues from voice continue to go down for the market leader – other networks do not release their results – while data earnings rise. MTN’s recent results show total revenue down 2.3%, largely because of lower earnings from voice calls. Data revenue however rose by 22.7% on the back of short-duration bundles to 32.8% of total revenue.
Other telecoms are most likely going through similar shifts, as more people chat on WhatsApp or on Facebook Messenger at the expense of calls. This has left telecoms with no option but to invest in technical backbones to provide better data services, and also in other revenue sources like mobile money and banking.