Will Vodafone Shake Up Telecoms Market?

The entry of Vodafone into Uganda’s telecoms market could shake up the market, where companies like MTN have enjoyed the lion’s share of the pie, and take the industry to a whole new level of mobile phone usage.

In Vodafone, MTN will meet one of its biggest rivals on the continent, and one that enjoys a huge customer base back in South Africa, where MTN is headquartered. The strategy that Vodafone, in partnership with Afrimax, intends to employ for the Ugandan market, will be closely scrutinised.

The firms announced on Tuesday that they had signed an agreement to offer voice and data products using the ‘Vodafone Uganda’ brand. In a statement, Vodafone Partner Markets Chief Executive Stefano Gastaut said: “Uganda is an attractive market and we are delighted to welcome Afrimax to our successful Partner Markets community.”

The company comes in at a time when Orange Uganda has agreed to sell its assets to Africell, a Lebanese firm, after the French telecom player decided Uganda was not bringing in the returns it anticipated. Also, Warid telecom, which had taken the Ugandan market by storm, bowed out last year. Newer players like K2 and Smart telecom are not finding it easy either.

Vodafone will have to choose between the aggressive strategy that Warid used, which brought it a huge a number of customers but at the expense of good-quality voice calls, or the cautious plan that Orange Uganda uses. Vodafone will have to match MTN’s huge brand, which has been built over 16 years, and can be seen in almost every corner of Uganda.

Either way, Vodafone will have to know that Uganda’s market remains fragmented the numbers of those addicted to cheaper calls remains higher than those who are ready to pay a premium for a good- quality network.

Understanding the whims and charms of Uganda’s market is not the only challenge that Vodafone has to grapple with the competition among the players, especially when it comes to the interconnection. Recently, MTN won a Shs 6bn court case against utl over a dispute about the interconnection charges.

There is also the challenge of attracting the numbers to use mobile money platforms. With Ugandans paying for such utilities like electricity, water, and cable television charges over the phone, this form of service has become a g factor in deciding which telecom network to use.

According to Bank of Uganda, as of end of last December, 2013, the value of mobile money transactions had reached Shs 19 trillion, far more than Uganda’s budget at Shs 15tn for this financial year. MTN, currently the market leader, said that last year mobile money contributed 12 per cent to its annual revenues.

Vodafone will have to come up with a g plan to sway customers towards its services. Perhaps the best strategy would be to come up with a g system network as some mobile money platforms for some companies such as MTN have in the past had issues of network breakdowns, which have disrupted services.

For now, Vodafone says it boasts of a g quality network to provide data services to customers, another area where customer numbers are gradually growing. Afrimax, Vodafone’s partner, boasts of 4G internet.

“We are rolling out our 4G [fourth generation] wireless networks and will be offering internet access… for both business and residential customers across our target markets… ,” said Afrimax in a statement.

The company launched at a time when MTN said some of its customers were experiencing problems with the data services, and that it would compensate those who had been inconvenienced.

Big brand:

Vodafone describes itself as one of the world’s largest mobile operators, present in several countries in Africa either through its own brand or through Vodacom, a brand it has majority shares in.

The company is listed on the London Stock Exchange (LSE). In Kenya, it has partnered with Safaricom, the market leader there. Vodafone has mobile operations in 26 countries, and partners with mobile networks in 53 more, and fixed broadband operations in 17 markets.

As of September 30, 2014, Vodafone had 438 million mobile customers and 11 million fixed broadband customers, according to a company statement

Source : The Observer

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