Airtel Uganda and MTN could be neck and neck in subscriber numbers following the signing of an agreement to acquire the operations of Warid Telecom Uganda.
Airtel Uganda is owned Bharti Airtel, the world's fourth largest mobile phone operator.
The company said Tuesday it had signed an agreement to buy Warid Telecom Uganda.
Warid, which entered the Ugandan telecommunications market five years ago, has been the country’s third largest player after MTN which was the leading player and Airtel in the second position.
Airtel, however, did not disclosed the financial terms of the deal.
The acquisition of Warid Uganda is likely to increase the company’s customer base in the country.
MTN claims to have 7.7 million subscribers as at December last year and claims a 51 per cent market share while Airtel says it will have 7.4 million after adding Warid’s 2.8 million customers.
The development which is still subject to regulatory and statutory approvals will now require the two companies sharpen their operational strategies in order to claim a solid market leadership position within Uganda’s telecom market.
The telecommunication companies said in a media statement yesterday that the development is expected to strengthen Airtel’s presence in the country and consolidate its position in the market.
There are about seven players in Uganda’s telecommunication market including MTN, Airtel, Warid, Uganda Telecom, Orange, Smile and K2 – the latest entrant.
Airtel entered the Ugandan market in 2009 after buying Zain Africa operations, resulting into a rebrand in 2010.
Mr Michael Okwiri, Vice President Corporate Communications Airtel Africa, however, told this newspaper that Warid customers will retain the ‘070’ numbers even after the transaction is completed.
He, however, declined to comment on the details about the transaction costs and the fate of employees, saying that it was “still early”.
Warid Telecom will be remembered for igniting a price war in the industry in the last quarter of 2010 as competition for customer base and market share heat up.
This resulted in a huge drop in call rates for both within and off-network for all the five major network service providers, a development that was welcomed by mobile phone subscriber s.
Players slashed voice tariffs from a market average of Shs380 per minute to Shs180 per minute, and later to Shs1 per second for on-network calls at the beginning of 2011.
Some players criticised the price wars saying they are distortionary, unsustainable and unhealthy to the industry and the economy as they result in low tax revenues.
The Uganda Revenue Authority reported a Shs89.1 billion shortfall in its Shs2.9 trillion domestic revenue collections target in the 2010/11 financial year, partly due to price wars in the telecommunications sector which dented revenue collections.
According to the revenue collecting body, price wars in the telecommunication sector led to a shortfall of Shs24 billion due to the decline in average call rates.