How Airtel turned eight- year loss into profits

Tuesday February 12 2019

A mobile money agent waits for customers in

A mobile money agent waits for customers in Kampala. The investment of over $800m since Airtel’s entry into the country is starting to yield results. PHOTO BY CHRISTINE KASEMIIRE 

By Christine Kasemiire

Airtel will start paying corporation tax after eight years of making losses, accumulated from Zain and Celtel. Airtel East Africa units from January to September 2018 declared $102m in profit from a $90m in loss in 2017. Prosper magazine’s Christine Kasemiire spoke to the managing director of Airtel Uganda, Mr VG Somasekhar about how the telecom turned the losses to profits.

What were the major highlights for the telecom sector in 2018?
2018 was quite unique for the telecoms sector with new regulatory guidelines. These include: The new Know Your Customer, Mobile Money Tax, Over the Top (OTT), new withholding tax guidelines and removal of scratch cards.

Airtel started off 2018 with hitting 10 million subscribers on the network, a milestone that repositioned us as a strong and fast growing telecom in Uganda.
Airtel became the first telecom company in Sub Saharan Africa with 100 per cent mobile broadband across the country. All out sites are now modernised to broadband sites with 3G and 4G technology.

How much have you invested since the acquisition of these assets from Zain Africa?
Airtel’s total investment to date has been at more than $800 million (Shs2.9 trillion), growing the number of mast sites to 1,630 across Uganda.

Is it true that Airtel Uganda also made profit for the first time? What numbers are we speaking about here?
We have now wiped out accumulated losses and yes, starting 2019, Airtel Uganda will be among the companies that will remit corporate tax.
What market dynamics have helped Airtel realise returns on investment?

Peace, safety, stability and policies that create an enabling environment for doing business in Uganda.
Demographics: Uganda has one of the youngest populations and fastest growth rates in the world presenting an opportunity for a strong workforce that should be skilled and empowered for growth.
Uganda is also a host country for over 1 million (1,091,024) refugees, widening the market base for telecommunication services.
The telecommunications sector is very dynamic, competitive and growth-led catalysing the growth of Uganda. Telecoms are leading the economic growth of Uganda.


How has Airtel Uganda managed to gain market share?
We have prioritised innovation in this market to ensure that we maintain and attract a wider customer base. Our products and services have been innovated to cut across different socio-economic classes. For example, at our service centres, we have a 4G enabled phone that costs as low as Shs200,000 and also more expensive and advanced 4G devices for the subscribers looking to do more complicated tasks on the go.

We have studied the market that we operate in and have identified causes, institutions with which we can make real tangible change both in the industry and lives of Ugandans.
We have partnerships with the Government of Uganda in areas of health, ICT in education and sports. We have partnerships with large organisations such as BCS and Facebook in the areas of network improvement. We also have partnerships with institutions such as the Buganda Kingdom through which we have tackled health issues and collaborated to power their local telecommunications company K2.
The investment of over $800m since Airtel’s entry into the country is starting to yield.

We know voice is no longer such a big contest for the telecoms. Between data and mobile based money transactions, what is the definer for the competition landscape for the telecoms sector?
Not true. Voice is still a major platform in Uganda. Mobile telephony penetration for Uganda is still under 50 per cent. The first mobile phone experience is linked to penetration. Notwithstanding, we are realising faster growth in data and mobile money. There are six players in the market today presenting consumers with a variety to choose from. Companies that have both voice and data have better growth prospects.

At Airtel, we rally on three main pillars:
To get closer to our clients, we have widened our distribution network through expanding the number Airtel Money branches, kiosks, service centres, SIM registrations centres and agents. Today, we are leading the way in building exclusive retail to serve customers seamlessly and swiftly in their neighbourhood.
Airtel Uganda is 100 per cent mobile broadband making it possible for subscribers around the country to enjoy a faster experience with both voice and internet services.
Pakalast was launched at Shs1,000 for 30 minutes. Six years later, we are still charging the same amount confirming price stability.

You have spent a lot of money on 3G network and yet comes 4G and 5G. Are you sure it is the right way to go?
5G is still an evolving technology under pilot and prototype.
The future is digitisation and smart phone penetration.
3G was the foundation that we built in order to prepare ourselves and Ugandans for 4G and 5G technology. Currenty, Airtel Uganda is 100 per cent mobile broadband with all the sites enabled with 2G, 3G & 4G technologies. We cover 97 per cent of the Ugandan population and 92 per cent of land mass.
This shows a robust foundation and preparedness for the newer modern technology.

What is the reality for services like video on demand and TV online yet data costs still remain high?
With our nationwide 3G/4G (Mobile Broadband) network, customers can stream a video and watch television online without any network interruptions. Airtel is 100 per cent Mobile broadband. Mobile broadband is a wireless technology that allows subscribers to connect a mobile device such as a smartphone or tablet computer to a high-speed 3G / 4G internet connection wirelessly through a mobile phone network. It can also be accessed through SIM cards, which insert directly into a smart device such as laptop, TV or camera, Mi-Fi’s which can connect up to ten gadgets and a Wi-Fi device for a home or office to connect more than ten gadgets.
This confirms that smart phone penetration and digitisation remain the next big thing for mobile phone penetration in Africa.

The telecom industry in Uganda has evolved registering over 24 million subscribers registering a 50 per cent penetration. Innovation, infrastructural development and ensuring the services are available across the country at affordable services will be the game changer.