Uganda’s telecom market too small for seven players?

Kampala, Uganda | ISAAC KHISA | Senior executives in Uganda’s leading telecom companies have always said the country’s mobile phone market has room to grow but it is too small to support all of the seven telcoms.

And the assertion seem to have come to pass, with the British based telecom, Vodafone, securing a bankruptcy protection.

The High Court Civil Division in Kampala issued a protective order on Feb 15 to enable the ailing company explore options for recovery. The same order confirmed the appointment of Donald Nyakairu as the company’s provisional administrator.

This comes barely three months since the company’s management including the Chief Executive Officer, John Ndego and Marketing Director, Progress Chisenga, resigned at the end of last year.

Vodafone Group entered the Ugandan market in 2015 in partnership with Afrimax Group, and subsequently rolled out 4G data services.

Vodafone’s new move comes nearly a year since Uganda Telecom was placed under receivership in April 2017 to save it from folding

Whereas its subscriber base and revenue remain scanty, MTN and Airtel controls about 21 million out of the country’s 23 million mobile subscribers, according to the Uganda Communication Commission.

MTN recorded a 6.2% growth in revenue to Shs715bn while Airtel net profit grew 85.6% to Shs 160.5bn in 2016 owed to high uptake of mobile money, value added services and data.

Vodafone’s new step could signal easy prey for acquisitions as it has been the case with the previous companies – Warid and Orange Telecom.

Airtel bought Warid Uganda in 2013 to become Uganda’s second-biggest telecom operator after MTN, owned by South Africa’s MTN Group.

Orange Uganda, owned by French company Orange, was sold to Africell in 2014, and there are indication that more could be on their way for acquisitions as stiff competition erode their profits.