Underlining growth in Rwanda's telecoms sector

The recent entry of Millicom International Cellular into the mobile services sector in Rwanda has energised the market allows competition and reduced tariffs.

The company, which operates under the brand name Tigo, launched its services in early December 2009, having obtained a licence in 2008.
Millicom paid $67mn to secure a licence as the third operator. It has since invested close to $52m in a national network rollout covering at least 13 districts. The company holds 87.5 per cent of the joint venture company in partnership with Marathon Corporation, an established Rwandan conglomerate.
The Rwanda mobile services has been dominated by the South African pan-African giant MTN up to 2006 when the state owned fixed line outfit Rwandatel rolled out the GSM service two years later. However, MTN controls more that 80 per cent of the subscriber base in a country considered as poor connected compared to regional countries. MTN Rwanda and Rwandatel have between them about 1.5mn Rwandan mobile subscribers.
“With a population of 10mn, mobile penetration of less than 20 per cent and a rapidly developing economy, Rwanda is a highly attractive market for Millicom. With our focus on affordability and our strengths in distribution and innovation, we believe we can make mobile voice and value-added services a reality for the mass market in Rwanda”, said Mikael Grahne, President and CEO of Millicom in a statement.
As a prelude of its competitiveness in the market, Tigo will operate per second billing, and it will have low denomination recharges and a flat rate tariff of 1.5 RWF per second across all networks.

Extending coverage
Launched to cover approximately 50 per cent coverage of the population, the Tigo brand is to be extended significantly over the next three years. In addition, 3G infrastructure has been launched in the capital Kigali and other key urban centres. With significant telecom operations in neighbouring DR Congo and Tanzania, the Tigo brand has the potential to create synergies between the three businesses over time, according to local observers.
Millicom also has ventures in Senegal, Chad, Ghana, Mauritius and several South American countries - but breaking the MTN grip on the Rwandan mobile services sector will be hard for Rwandatel and Tigo. Already, the dominant market player having operations in African and 5 Asian countries, MTN has the financial muscle to stake its claims on the competitive market. The South African based company has vast experience in the African market.
At the same time, the company has added value to its services by providing a money transfer service similar to Kenya’s MPESA. Statistics indicate that only 14 per cent- about 1.35mn of the Rwandan population currently use banking facilities. This compares badly to 1.9mn people - about 20 per cent of the population - who own a phone. With this in mind, MTN Rwanda is launching a money transfer service that will utilise a phone to send money across the country.
Since the genocide in 1994, Rwanda has been struggling to forget its past and in recent years has witness high economic levels becoming the darling of Western investors and financiers. At the same time, Rwandatel and MTN are rolling out national fibre backbone networks to allow them to connect to international submarine fibre optic cables on the African east coast. Seacom, which landed in July 2009 at the Kenyan Port of Mombasa has given the entire region fibre-based international bandwidth for the first time and bringing to an end its dependency on satellites. The two have already launched third generation mobile services. The two providers have been positioning themselves in the data services for the eventual competition prompted by the Tigo entry.
In recent years, the country has been striving to move away from an agricultural-based economy to a knowledge-based one through the development of competitive service-based industries. Development of the Information and Telecommunication (ICT) has been tauted as the best way to attract private investment. The lack of a skilled workforce – even with political goodwill - has been seen as the biggest challenge to progress.

Mwangi Mumero

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