Wednesday September 29 2010

Telecoms declare new price war

Uganda telecom rates


By Faridah Kulabako


Three mobile telephone companies yesterday announced a reduction in call rates a few days after Warid Telecom sparked off a price war in the industry. Market leader MTN Uganda and Zain, the second-largest telecom company by subscriber numbers, announced separately yesterday that they would cut their prices to Shs3 per second for calls to other networks, in response to Warid’s rate of Shs5 per second announced last week.
Uganda Telecom also announced yesterday that it was cutting its per-second cost to Shs5 for calls made from its network to other networks, and Shs4 per second for calls made within the network.

Users’ benefit
The new prices represent significant savings for mobile phone customers across the country who have been paying an average of Shs10 per second on telephone calls across networks. MTN Marketing Manager Isaac Nsereko told Daily Monitor yesterday that its customers will be charged Shs320 per minute to all networks for the first 10 minutes of calls each day. Thereafter, calls within the MTN network will be charged at Shs160 per minute while calls to other networks will revert to Shs320 per minute.

Subscribers on the network’s per-second profiles will be charged at Shs6 per second for the first five minutes of calls made to all networks, after which they will be charged Shs3 per second for calls within the network, the MTN official said. Mr Nsereko said the promotion is being launched to mark MTN’s 12th anniversary and will run until the end of the year.

Although officials from Zain were not available for comment, official communication from the firm indicated that the price cut would be available to pre-paid and post-paid customers and would include three free on-network texts. The firm has also cut international call costs to India, China, USA and Canada to Shs299 per second.

In a press statement, UTL Chief Marketing Officer Mohamadou Konkobo said: “Our tariffs have been revised to give our mobile phone users the opportunity to communicate at cheaper rates and for longer periods. At this time, any saving is welcome to our customers and we would like to be part of their saving.”

Warid CEO Madhur Taneja, whose firm sparked off the price war last week, said he was pleased that other telecoms were responding to the price reduction. “Reducing call rates is the way to go and the consumers will get value for their money and I hope that every player in the market does so,” he said. Officials from the other mobile telephone companies; Orange, Smile and i-Telecom were not available for comment yesterday.

The current price war is seen as a result of growing competition in the market as well as industry regulator Uganda Communications Commission’s recent reduction of the ceiling of interconnection fees from Shs180 to Shs130 per minute where firms fail to agree bilaterally.

Other countries...
The price war follows a similar war in the Kenyan market which started after Zain Kenya cut its calls rates by half to about Shs75 per minute across networks. Market leader Safaricom, which has over 70 per cent of the subscriber base, responded by cutting its rates from Shs300 per minute to match the Zain rate and slashed intra-network calls to Shs50 per minute, down from Shs200.

MTN officials say 65 per cent of calls made are within their network and this could explain the discount on intra-network calls and a smaller reduction on cross network calls. The industry has already witnessed massive cuts in intra-network calls as players charge one-off charges for unlimited calls but the reductions in cross-network calls is likely to spark a new battle for subscribers amidst lower revenues.