Orange Uganda eyes more internet revenue

Orange Telecom intends to increase revenue from internet services, voice revenues continue to decline reports Uganda’s Observer

Orange points out that its change in strategy is due to what the company describes as an overheated telecom market. Phillipe Luxcey, Orange Uganda’s Chief Executive Officer, says with six players in the market, chances for growth are very minimal as telecoms continue to share the same customers between themselves.

“There is really no new customer in this market. It is a crowded market and some operators have been in operations for ten or more years. It is not easy, especially for the new players, to grow because there are no new customers. Multimedia and data services will remain key engines for growth in the future,” he said.

Uganda’s market has lately seen stiff competition in the voice market. While the number of telecom companies has increased, it is the cutthroat pricing that appears to have saturated the market. WARID Telecom kicked off a price war with its Pakalast promotion, which saw its clients enjoy free calls all day for as little as Shs 1,000 (half a dollar.) Zain, MTN, and utl, all designed promotions to counter WARID’s strategy.

Some players in the industry say that the decline in profit margins accruing out of selling airtime and phones was one reason why MTN, the largest telecom company in Uganda in terms of subscriber numbers, engaged the Uganda Communications Commission into a court battle over the latter’s plan to introduce uniform interconnection fees.

The interconnection fees would offer new players such as WARID and Orange Telecom a strong platform to catch up with their older and bigger telecom rivals. But the court finally ruled in MTN’s favour, leaving the smaller firms to play catch up.

Luxcey’s fears are compounded by the UCC’s market review 2008/9 report that notes that despite a growth in telephone lines per 100 people from 21.2% in 2007/8 to 31.6% in 2008/9, growth rates continued to come down for the second year running, falling from 69% in the previous year to 53.6% in 2008/9.

Though there was no soaring growth in internet subscribers and estimated internet users, this subsector provides hope and leverage for growth for telecoms especially in mobile internet. By the end of June 2009, there were 310,058 mobile wireless subscribers with Orange Telecom claiming to own 10,000 of those.

“Our strategy was to offer something different, focus on multimedia, internet services and offer mobile broadband internet to our customers”, Luxcey says.

The company has switched to the same 3G+ network that it rolled out in the UK last year. 3G+ provides faster response speeds and enhances bigger file transfers and data streaming compared to the 3G or GPRS network that other subscribers are connected to. Technically, a 3G+ network enabled phone can download a 3MB file in 34 seconds compared to 20 minutes of the same file with a GPRS enabled phone.

To stay ahead in mobile wireless services, Orange also introduced on the market the Shs 200,000 wireless router that enables up to 20 internet users with wireless enabled devices to share the same internet modem. In addition the telecom is about to roll out a more complex wireless router for relatively smaller businesses that also wish to share the internet services using a single modem and also wish to create a Local Area Network (LAN).