Wednesday March 19 2014

Why Uganda and its mobile phone companies could soon ‘disappear’

By Charles Onyango-Obbo

These have been stomach-filling days for the region’s news junkies.
Before they could get enough of the madness in South Sudan and Central African Republic, Eastern Europe, where a resurgent Russia is slowly swallowing Crimea, hitherto a region of Ukraine, was thrown on their plate.

Then that mysteriously disappeared Malaysian passenger aircraft muscled its way into the headlines. The world today is a turbulent place, and changing dramatically. But what will remake the world as we know it are, not guns, but, well, technology in the broad sense.

A few weeks ago, some people whom I couldn’t say no to asked me to meet an American gentleman in my office…on a Sunday evening. The good man I met was Howard French, formerly an editor with Newsweek, and now an associate professor at the Graduate School of Journalism at Columbia University, in New York.

After the meeting, Mr French sent me an email with several things, including an article entitled “How Africa’s New Urban Centers Are Shifting Its Old Colonial Boundaries”. You must read it if you haven’t at (

It is a long and fascinating story, in which French makes the point that the way Africa’s cities, led by Lagos, are changing, soon they will totally remake the continent’s borders. From Lagos, Takoradi in Ghana, Lomé in Togo and Cotonou in Benin, a long urban corridor linking exploding cities is growing. Thus to use an East African example, his argument could be that from Mombasa, through to Nairobi, onwards to Jinja, Kampala, Mbarara, Kigali and so on, by the end of this century urban growth will mean you can drive for two days across these countries and never leave a city street or notice that you have crossed from Kenya to Uganda.

Add to that all the communication technologies connecting the cities, borders will collapse.
And that brings us to what might, on the face of it, look like just a regular news item. In Uganda, a new telecom company, Smart Telecom, launched and it offered a low cutthroat call price of only Shs74. Smart Telecom, came to life after buying the Sure Telecom licence.
In Kenya, meanwhile, the giant mobile phone company Safaricom and rival Airtel got together and made a KSh8b (UgShs240b) bid for struggling Yu. They will probably gobble up its pieces and shut it down.

However, we know that Safaricom’s annual revenues are nearly twice as big as Burundi’s budget. What does this mean? My sense is that the Russian type swallowing up of small nations or parts of their territories will happen with the telcos.

In the years to come, I would not be surprised if Safaricom is the sole significant mobile phone company for the whole of East Africa, with perhaps Airtel a further second, providing very niche services.

That is because, first of all, the market for the many mobile phone companies in East Africa could disappear over the next 10 years. Last year alone, according to industry insiders, Kenyan telcos lost a staggering 40 per cent of their data market collectively!

Where did it go? Well, free apps like WhatsApp and Viber, which users can use for a tiny fraction of an SMS, and offers far greater value because they allow one to attach and send photos and videos far better than traditional text, ran away with the market.

Data had become the telcos most lucrative product, because they had slashed prices dramatically on voice. The other thing I do is spend quite a bit of time with wild-eyed techies who are obsessed with new crazy and disruptive technologies.

One of them took me through a new product that is still sailing below the radar, which allows you to set up a closed and independent network over your mobile phone among a close-knit circle of relatives or colleagues. So you can set up a network on which a brother in the US, a sister in the UK, a cousin in South Africa, and yourself in Kampala call each other on special numbers you create for the network - free!

Another explained to me ways in which one can set up a Wi-Fi network, and you and your friends enjoy a free service, undetected by authorities. These technologies will grow, and in the years to come will eat away all the profits of most of the telcos.

Only Safaricom, with the massive investments it is making in fibre, might survive in the region. Then it can pick up the pieces from the East African telco graveyard, and build a regional network. That could give it the kind of power no government has in our part of the world, and make nonsense of borders and cross-border regulation.
You want to make sense of it all? Then I recommend a book. Buy and read George Friedman’s “The Next 100 Years” will thank me for it. & twitter:cobbo3