Airtel Uganda’s managing director Tom Gutjahr does not think that the country can sustain all of its seven operators, which fight over a market with a population of 35 million.
“It’s an absolute illusion to believe that four, five, six mobile operators can ever be profitable in one country,” Gutjahr (pictured) told Reuters, adding that “it’s unlikely that the smaller companies will get profitable any time soon.”
Although the sector expanded by 11 per cent in the 2012/13 fiscal year, officials believe intense competition has forced operators to lower prices to attract customers, causing margins to become thin – thereby seeding the ground for more mergers.
Gutjahr has said that Airtel, which has experienced “some growth” this year and has spent around $100 million to expand its infrastructure, will consider any other interesting offers that come its way.
According to GSMA Intelligence, there are 21.86 million mobile connections in the country, where MTN dominates the market with 10.8 million, nearly half of the total, while Airtel is in second place with 8.47 million. It achieved this position after buying Warid Uganda last year.
Uganda Telecom comes in at number three with 2.7 million connections, indicating the uneven state of market share and competition.
Another company to be sold off was Orange Uganda, which was bought by Africell earlier this year, although compared to giants like MTN, Africell is a small-scale player, with around 800,000 connections.
However, Gutjahr does believe that there is portential for growth opportunities because almost half of Uganda’s population is under 15. Many of these youngster will become “telecommunications users of the future,” he said, describing such growth as “absolutely unique in the world.”
Another African country with similar issues is the Ivory Coast. It too has seven operators and a relatively small market size, where the regulator took drastic action against what it said was poor service in the country’s mobile market in October. It withdrew the licence of Café Mobile with further cuts to the remaining operators also promised.