MTN Negotiates Renewal of Kigali Telecom Licence

Despite having infrastructural challenges MTN Rwanda is due to renew its licence to operate as a communication service provider in Rwanda, according to the MTN Group Integrated Report of the year 2007.

The company that was given a five year duopoly, after a cabinet decision in 2003 to operate as national operators together with another telecom operator Rwandatel, will have its operational licence expire by the end of the year.

Under the licence, MTN Rwanda was to construct, maintain and operate a 900, 1800 and 1900MHz (including cellular public pay telephones) GSM telecommunication network within the geographic territory of Rwanda. Regulators in Rwanda have since this year the found the provision of these requirements substandard calling for a penalty against the telecom operator.

The company was last month fined a tune of $140,000 by the Rwanda Utilities Regulatory Agency (Rura) in just two weeks for failure to meet its licence obligations. The original licence that was granted in 1998 with a validity of 10 years may also be terminated thereafter with a two-year written notice period.

According to the report the South Africa-based MTN Group paid an initial license fee of $200 000 and pays an annual license fee based on 3 per cent of revenue as defined in the licence.

Despite the fact that this year an amount of $500 000 was paid for an extension to the old licence, MTN Group says the terms of the renewal are currently being negotiated.

Rura, the body mandated to regulate certain public utilities including telecommunications says that at the expiry of the exclusivity period the Rwanda government will select a 3rd national operator who will be issued with both fixed and mobile licences for 15 years.

This according to Rura would be done in line with government’s objective to fully liberalise the telecom market. Reuters new agency reported recently that the Kuwaiti-based mobile telecommunications Company which owns the Zain brand is already in talks to buy a mobile telephone licence in Rwanda and that it may submit bids by the end of September. Zain formerly Celtel operates in 15 African countries.

MTN Rwanda recently found itself locking horns with RURA, the regulators for failing to upgrade its network after complaints of poor quality in service provision contrary to its licence conditions.

A document from Rura’s board meeting held in August this year and signed by the Chairperson Marie Claire Mukasine says: “MTN Rwanda is hereby imposed a daily fine equivalent to Frw 5 million ($10,000) for two weeks…”

“During the above period MTN Rwanda shall submit to RURA a clear roadmap showing the actions to be undertaken to meet the quality of service standards. The roadmap shall ensure that MTN will be able to solve the problem within a period not exceeding two months,” it adds. MTN Group says its ownership of MTN Rwanda was increased from 40 per cent to 55 per cent for $40.5m converting the joint venture operation into a fully consolidated subsidiary of the group.

According to the integrated report MTN Rwanda which was Rwanda ‘s best tax payer for the year 2007, contributed the 4th largest revenue to MTN’s South and East African (SEA) region. The region is the largest contributor to MTN group in terms of revenue and second in term of subscriber with MTN south Africa being the key driver of growth and profitability.

“MTN Rwanda contributed revenues of R305 million and net profit of R101 million to the group, if the step up had occurred on 1st January 2007 the contribution to the Group revenue would have been R583 million and the contribution after tax would have been R197 million.

MTN Rwanda has since last year recorded a number of achievements. The group report says that the Village Phone project in Rwanda has expanded exponentially. “Through this initiative, MTN allocates public payphone boxes to local entrepreneurs to manage.

In Rwanda the success of the Village Phone project was heighted this year as it expanded to all the 30 Rwandan districts establishing 1,100 new businesses,” the report said.