Rwanda revokes Rwandatel licence, seeks third mobile phone operator
By BERNA NAMATA
Posted Monday, April 11 2011 at 00:00

Rwanda will issue a new mobile phone operator licence to fill the gap left by Rwandatel whose mobile license was revoked over failure to implement its licence requirements last week.

This will be the third time the company is changing ownership since 2005 after Terracom, the American firm that initially took over from the state, also failed to meet its licence obligations.

Until last week, the Rwandan telecom industry had three mobile operators — MTN Rwanda, a subsidiary of South African MTN Group; Rwandatel, majority-owned by Libyan consortium LAP Green; and Tigo Rwanda, owned by Millicom International Cellular.

Industry analysts say Rwandatel's operations were crippled by mismanagement and the financial difficulties faced by its parent company LAP Green.

While LAP committed itself to invest $87 million in the first year, and another $177 million over five years from 2007, industry regulator Rwanda Utilities and Regulatory Agency (Rura) said approximately 40 per cent of this amount was invested in four years.

Rwandatel has also been sued by MTN Rwanda over an accumulated interconnection fee estimated at $3 million.

Rwandatel's commitments included upgrading the network, but this has not been done for the data and mobile segments, according to Rura.

Attempts to reach Rwandatel for a comment were fruitless as the company is neither picking calls nor responding to emails.

However, in a recent interview, Rwandatel's communications manager Cleophas Kabasiita told The EastAfrican that the company would appeal against the regulator's notice.

"It is a decision the management did not agree with as we felt it was unwarranted and unjust, especially at a time when the quality of our network has improved," she said.

But RURA says the decision to revoke Rwandatel's license is final.

Though Rwandatel's fixed telephony and Internet services will remain operational, since they are covered by a separate licence, Rura said the tender process for a new mobile operator will begin soon to sustain growth in the industry.

"We feel three mobile operators are enough to cover the market but now that we have two, we will have to speed up the process. It should be this year, after consultations with policy makers," Regis Gatarayiha, acting Director General of Rura told The EastAfrican last week.

While the country was gearing up for a fourth mobile operator this year, Rura said it has suspended the decision until there is stability in the performance of the market.

The country has 32 per cent mobile penetration, the second lowest in the East African Community region after Burundi.

Rura said the current mobile phone subscribers is about 3.62 million, out of a population of approximately 9 million people, which is too small to allow the fourth operator.

"We think there are things that need to be fixed in this market before we can achieve good penetration rate; we have realised that some companies are not really competing and if competition is not perfect, definitely they are not going to look for the unconnected," Mr Gatarayiha said, adding that the existing telephone companies are fighting over the same market segment in the urban areas.

While Rwandatel's exit is expected to have a negative impact on the country's targets of achieving 60 per cent penetration by 2012, Mr Gatarayiha noted that with aggressive competition in the industry, the target can still be achieved.

As at September 2010, statistics from Rura showed that Rwandatel had 535,710 subscribers, putting it third behind MTN Rwanda with 2.3 million and Tigo Rwanda, the new market entrant, with 685,000 users.

To allow operators to lower prices and deepen mobile penetration, Rura has commissioned a study of the telecommunications industry to propose new interconnection fees.

Done by PricewaterhouseCoopers LLP, the study, financed by the World Bank, is expected to be complete in May.

"We see the cost of interconnection as a barrier for operators to be able to price off net tariffs that are affordable to the Rwandan population. Today operators are paying each Rwf40 (less than a dollar) a minute for inter-connection, a figure not based on the actual cost that operators incur," Mr Gatarayiha said.

Rura is also considering a framework that will allow operators to share infrastructure in a bid to lower costs.

"We think if new entrants were able to access the infrastructures already deployed around the country at a cost, the rollout would move quicker."

The regulator has also suspended mobile number portability, a service that was expected to commence this year, to allow operators to consolidate their market share.

http://www.theeastafrican.co.ke/business/-/2560/1142008/-/item/1/-/m6406az/-/index.html

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