Over one million Rwandans embrace telecoms courtesy of intense competition in 2010

The year 2010 goes down in Rwanda’s recent economic history, as one in which very intense competition within its telecoms landscape has led to the kind of effects that can be said to have potential for real transformation starting 2011. Analysts have noted that the price wars within the sector, ignited by the entry of Tigo as the third licensed operator early last year has forced the players to drastically cut down rates to as low as Rwf 3 per minute only a fraction of over Rwf 100 per minute operators charged less than two years ago. Given such dynamics it can be said that 2010 has been a very eventful year for Rwanda’s telecoms sector in which voice market leader MTN had to contend with a “David verses Goliath” strategy unleashed by new kid on the block Tigo. Just as it had started very dramatically, the two horse race between MTN and Tigo can be taken as one of the key value drivers that has changed the face of the local telecoms landscape in a way that was unimaginable only three years ago. So intense has been Tigo’s onslaught that MTN conceded that there was possibility of not meeting its revenue targets of 2010 on account of competition. “2010 has been a stiff year. We did not expect this tough competition but we worked very hard as we managed to acquire 76 percent of the market share and increased our subscriber base to over 2.5 million (just prior to close of the year),” MTN CEO Khaled Mikkawi was quoted by the press recently. As the year came to a close, for instance, MTN was feting its subscribers by offering an end of the year cash give back mega bonanza in which Rwf 100 million is up for grabs till early 2011 along with tariff structures based on the “MTN Zone” package with discounts reaching 70 percent charged on net calls. In addition MTN says it is offering 20 to 30 percent bonus on purchased airtime based primarily on amount of air time loaded by its customers. Many lucky customers on the MTN network were during the course of 2010 able to win large cash prizes that impacted positively on their lives. Tigo Rwanda on the other hand, with over 600,000 active subscribers according to market regulator Rwanda Utilities Regulatory Agency (RURA) statistics for third quarter 2010, was by end year offering an opportunity to its users a chance to win, for the very first time in the country’s telecoms history, a brand new Toyota Fortuner worth Rwf 35 million further raising the stakes in the ongoing battle for market share by the three operators, along with a new wave of promotions. This kind of intense competition has resulted into netting over 1.2 million Rwandans who had previously been locked out of accessing cheaper and affordable services, firmly into the national telecoms network in the last 12 months. The profile of such new users is largely composed of Rwandans still languishing within the country’s base of the economic pyramid. Statistics by RURA indicate that mobile penetration has been on a steady upward trajectory in the last 2 years climbing from 1.3 million subscribers in 2008 to 2.4 million in 2009. However, the rate of penetration witnessed a huge leap frog with the entry of Tigo starting early 2010 and peaked by third quarter of 2010 once Tigo started operating at full steam. The penetration witnessed a quantum leap from 2.7 million subscribers when Tigo started operating at full swing around end of first quarter 2010 jumping to 3.1 million subscribers by mid year 2010. As at end of third quarter 2010 RURA says that active subscribers stood at 3.6 million translating into a 36.2 percent mobile teledensity for the entire country. The implication of this kind of new dynamic is varied. However, the most outstanding is the fact that the competition has enabled such previously unreachable citizens, mostly the rural poor to generate additional business running into several millions of dollars in the coming days. Experts say that such huge effects anticipated is largely due to the fact that telecoms specifically, and ICTs generally is now recognized as one of the key value drivers of Rwanda’s highly ambitious transformation agenda in the next 7 years. The Sunday Times went a step ahead to look at recent studies that suggested that increased use of telecoms for a country’s economy such as Rwanda, leads to higher levels of wealth creation for its citizens especially those still languishing at the bottom of the economic pyramid. Ends