A report published by Rwanda’s telecom regulator says that Rwandans made over 3 billion telephone calls last year. According to the report, about 20 percent of the calls were international hile the rest were within Rwanda.
The report that illustrates telecom tariff statistics from January to September 2011 also reveals that despite earning a staggering Rwf72.6 billion during that period, telecom players including MTN Rwanda, Tigo Rwanda and Rwandatel only invested about 23 percent of that money.
With BhartiAirtel set to start operations this year, investments in the industry are set to double by the end of 2012 as incumbent players are introduced to new competition. Airtel announced that it would invest US$100 million (Rwf60 billion) over the next three years, making it the largest ever investment by an Indian company in the country.
Airtel is already operating in 19 countries across Asia and Africa. However the argument is whether by coming to Rwanda, it is only interested in expanding its footprint across the African continent or to engage in actual competitive business.
With the defunct Rwandatel assets up for grabs and a new player joining the industry, RURA might consider revising interconnection fees and new figures could destabilise the already existing tariff structure of the industry.
The report says that despite the tariffs for mobile telephone calls remaining stable from January to September 2011, Tigo was the cheapest in terms of both regional and international calls.
“Though Tigo-to-Tigo (on-net) call tariff is twice higher than that applied by MTN, Tigo’s continuous promotional tariff for Tigo-to-Tigo calls makes it appear as the cheapest. If the normal tariff was to be applied by both operators, MTN could be twice cheaper in terms of on-net calls,” the report says.
Currently Tigo-to-Tigo promotional tariff is Rwf18 per minute while the normal Tigo tariff to any number out of Tigo network is Rwf90 per minute. In November, MTN cut local off-net rates by 30 percent from Rwf90 to Rwf60 and calls to regional partners (including Safaricom of Kenya, MTN Uganda, Vodacom of Tanzania and Leo of Burundi) by 50 percent from Rwf128 to Rwf60.
On-net calls are the ones made within the same network while off-net cross over to another network.
The difference between on-net and off-net tariffs is an issue that is hotly debated between operators and regulators. Small operators contend that their competitors’ high off-net prices are anticompetitive forcing them to face aggressive on-net strategies to drive market penetration at a cost of significantly increasing on-net versus off-net price differentials.
However, experts believe that Airtel as a new entrant in Rwanda’s mobile market might face challenges due to the structure of prices charged by incumbent networks like MTN. In particular, on-net versus off-net price differentials create tariff-mediated network externalities which make larger networks more attractive to consumers than smaller networks.
While the report is published by Rwanda Utilities Regulatory Agency (RURA)’s website, efforts to get RURA’s boss Regis Gatarayihato comment on these issues were fruitless as he never picked his phone and never answered emails.
MTN and Tigo officials contacted to comment on the same issues also did not respond to the queries posed by The Chronicles.
RURA also added that despite slow growth, active mobile subscribers as of November 2011 had risen to 4.4 million. While MTN still has the geographical coverage of over 90 percent, it is also still the leading in mobile subscribers with over 60 percent of the market share with 2.9 million subscribers.
“By September 2011 Tigo had already acquired 55 percent market share in terms of on-net calls due to the continuous on-net promotional tariff. The company had also acquired over 50 percent of the off-net traffic market by the same period,” the report says.
“Tigo is the cheapest in terms of international calls, but figures indicate that MTN is still dominant in terms of international calls volumes with 86 percent traffic market share. This is definitely due to the bigger number of MTN subscribers,” it adds.
Rwanda targets at least six million subscribers by the end of 2012. RURA said that the target for mobile telephony by the end of 2011 was 3.7 million subscribers. That figure was already exceeded by 15 percent as of September 2011.
The report also says that despite the growth in mobile subscriptions, fixed lines remained stagnant at 43,095 subscribers. Rwandatel is the most active fixed line telecom operator while MTN remains with a few. Tigo Rwanda could not confirm whether the company has any subscribers on fixed lines on not. However, Rwandatel is 33 percent cheaper than MTN in terms of fixed on-net calls.