People using smartphones on Kampala. the cost of smartphones have been largely affected by high taxes informed by an 18 percent Value Added Tax, Import Duty of 10 percent, six percent withholding tax and an infrastructure levy at 1.5 percent. PHOTO/EDGAR R. BATTE


Is 5G 'overrated' for the Ugandan market?

What you need to know:

Telecoms are prioritising urban locations for 5G technology while maintaining a business case of 3G and 4G for rural locations.

MTN Uganda and Airtel Uganda, the two top telecoms have in the last one month hyped 5G technology as the next frontier for high speed broadband internet for Ugandans, but the reality on ground provides a stark contrast.
Telecoms during mega launches of 5G in Kampala city have sold the idea that the technology will revolutionise the digital landscape, redefining the way Ugandans experience connectivity with deployment of 5G sites across all the cities in Uganda.

To put it in perspective, 5G has faster data speeds for streaming and downloads reaching between 500 Mbps and a gigabyte per second, with enhanced capacity to support a larger number of connected devices, according to some trial tests done by telecoms within the city.

A telecom mast in Kampala. Telecoms have focused on a more business-to-business strategy deploying 5G in more urban and business locations, with less focus on rural locations. PHOTO/MICHAEL KAKUMIRIZI

In ideal conditions, MTN Uganda shows 5G is up to 100 times faster than its predecessor, 4G. 
Airtel, on its part, has rolled out 50 sites in the last week around the Kampala Metropolitan Area.
Manoj Murali, Airtel Uganda managing director, described it as a progress towards launching 5G in the rest of Uganda in a phased manner.

The technology launched as early as 2019 in countries such as China has caused significant advancement in many aspects of daily life.

The new generation technology is expected to unlock the full capabilities of next generation services such as virtual and augmented reality, ultra-high-definition video streaming, artificial intelligence, robotics, automated cars, and the Internet of Things (IoT).

While speaking at the media briefing held at MTN Uganda headquarters on July 28, Sylvia Mulinge, MTN Uganda chief executive officer summed it up as, “a cutting-edge network service[that] will play a pivotal role in driving ICT solutions and fostering unparalleled digital experiences for all Ugandans.”

The long road ahead
For the uninitiated, telecoms jostled for attention at the beginning of the year showing that the era of slow internet would be history, as they raced to introduce 5G network.

The only obstacle that stood in their way was to receive a 5G spectrum from the Uganda Communications Commission.

The spectrum licence granted in June set the pace for telecoms to roll out 5G after numerous trials across the country.
However, residents, and equally business people living in 5G locations in Kampala city continue to express dissatisfaction about the 5G technology, a proof that Ugandans may take longer to experience the high speed network.

This publication’s mini-survey at Lugogo Mall, one of MTN’s key 5G locations, provides a mixed bag of experiences for traders operating at the mall.

This reporter interviewed traders within Lugogo mall, who preferred to speak on condition of anonymity because of the sensitivity of the matter, but most said they are yet to experience 5G.
In fact, most said they are either tagged to Wireless internet from other service providers for their business operations, and only use cellular data for backup, while others portend that their mobile phones are not 5G – compatible and therefore can’t access the network even when in 5G locations.

“I have a 5G phone but I haven’t changed my settings to 5G because my friends who tried it said the data moves faster. For now, I have to use 4G though it gives me a hard time,” a business lady at Lugogo mall said, preferring to keep anonymous.

Dennis Bategeka, an IT specialist, shares a good experience with 5G.
“I have used 5G and so far it’s working faster for internet browsing, and social platforms compared to the 4G internet,” he says.

He noted that he would want telecoms to try out 6G, which is currently being used in some countries.
However Kenneth Tindyebwa, managing director at Rwambomu Security services, says it is a technology that he wants to experience but has limitations.

“I don’t know much about 5G, although I see it on media platforms. But when I came to the service centre, I was told my phone has no capacity for 5G because I wanted it through an E-simcard.
“Our Ugandan internet is still okay because that’s the experience because I work here, and haven’t moved abroad to experience other countries’ internet speeds,” says Tindyebwa.

Even with the Lugogo mall MTN service being 5G compatible, our mini-survey indicates that only a few categories of phones such as the Iphone and other latest Samsung phone brands are able to use the network.

A man holds a basic feature phone. For most rural Uganda, even if 5G is deployed, most people still hold basic feature phones which cannot use digital applications. PHOTO/ MICHAEL KAKUMIRIZI

A few users at the mall who can access the network say the standard IMEI code (*#06#) determines a phone’s capability to use the network, or an upgrade to an E-simcard could provide higher chances to access the network.
However, for 5G to work, one needs a 5G- compatible phone which remains a pipeline dream for many average Ugandans.

It’s only those that can afford the latest Apple (iPhone) or Samsung brand that have the leverage to use the 5G network.
The latest 5G- enabled Samsung A53 phone costs Shs1.5m, according to a one phone importer interviewed at Lugogo mall.

Manoj, the Airtel managing director, made it clear that those with an iPhones could switch on 5G without divulging details why he excluded other categories of smartphones.

“New phones, such as iPhone 12 and above, support 5G. Customers with older devices can upgrade to 5G-compatible phones,” a statement reads in part.
However, according to some figures within telecom circles, 5G compatible phones can cost a minimum of $300 (Shs1,119,751).

Based on the current economic dynamics, most Ugandans can only afford a basic smartphone with inbuilt applications which goes for an average of Shs150,000 ($41.3) on the market.
Such a cost still eats into what most Ugandans earn vis a- vis other living costs based on a 2021 national labour force survey conducted by the Uganda Bureau of Statistics which revealed that about 20 million people engaged in gainful employment earn a monthly average of Shs200,000.

Telecoms on their part indicate the idea of 5G can only be fully deployed if devices can be made available, and at an affordable cost.
A source at Huawei, a China device manufacturer, says the possibility of having 5G phones in Uganda is possible, only if a partnership is sealed.

Even globally, the issue of 5G handset penetration has been limited due to a shortage of semi-conductor chips in the last two years, according to Liam Mimnagh, a senior telecom analyst, in his article, ‘Telecom semiconductor demand is beginning to outstrip supply,’ at STL research firm in London.

Economies of scale
MTN has indicated that deploying the 5G network across the country could take two years upto 2025. 
The other pressing issue has been the economies of scale of deploying 5G in far-flung areas of the country, which may not have a positive return of investment.

At close observation, telecoms have focused on a more business-to-business strategy deploying 5G in more urban and business locations, with less focus on remote locations.
Rural locations have changed little as the 5G roll-outs have focused on urban areas, and an industry expert says they don’t see a meaningful push for rural 5G.

Telecoms have indicated a priority for urban locations while maintaining a business case of 3G and 4G for rural locations.
In fact for most rural Uganda, even if 5G is deployed, most people still hold basic feature phones which cannot use digital applications.

A telecom industry analyst at a major telecom who spoke on condition of anonymity aptly puts that, it doesn’t make business sense to deploy 5G in Karamoja, a rural and sparsely populated region, whose people still use basic feature phones, and remain unconnected to modern use of digital applications.

He says much of what is likely to drive 5G deployment expansion will be purely based on economic return of investment for a particular geographic region.

“Right now, devices that support the technology are countable, not every device supports 5G, and yet the whole country is ‘Omuntu wa wansi, and we still have areas in the country where 4G is not yet embraced because people don’t have 4G devices,” he says.

Phone subscriber data from Uganda Communications Commission based on a December 2022 report shows that 38 million devices were recorded on the network, with 23.8 million being feature phones which is the largest share, and only support calls, messages, and a few advanced features for browsing.

Smartphone data, according to UCC, stands at 12.2 million monthly users. David Birungi, the Airtel public relations officer says the number of smartphones are low compared to the average fixed costs incurred by telecoms to provide data services.
Birungi argues that the cost of smartphones have been largely affected by high taxes informed by Value Added Tax, Import Duty,/ Withholding Tax and infrastructure levy.

Uganda Revenue Authority records show that the taxes levied on smartphones is dependent on the type of smartphone and the country of origin.
For instance, Import Duty attracts a 10 percent levy, VAT at 18 percent, Withholding Tax at 6 percent and Infrastructural Levy at 1.5 percent, giving a total of 35.5 percent.

The ICT and National Guidance Minister, Chris Baryomunsi last month revealed that there are ongoing discussions over developing a favourable tax regime to reduce the cost of devices.
He added, there were also discussions to have negotiated arrangements with phone manufacturing companies on cutting cost devices.

Geoffrey Donnels Oketayot, the chief executive at Towerco of Africa sums it up saying, even if the country is not yet ready, there is so much that can be achieved once the telcos prepare the market [through infrastructure] for the service to be enjoyed.