Orange Uganda has finally bowed out of the Uganda market amid increasing competition, unpredictable regulatory environment and general high costs of doing business.
Orange has registered limited success in Uganda since its official launch in early 2009, with a reported 620,000 thousand mobile subscribers as at the end of December 2013. As I wrote in January 2014, telecom is a numbers business. To break-even, a telecom company needs a minimum of 3 million subscribers due to high interconnect costs.
Orange’s survival has been attributed to its flagship data service product – Orange Internet Everywhere. However, with the market leaders MTN and Airtel focusing on the same segment, Orange has been finding it difficult to retain customers. Plus, some analysts say Uganda’s telecom sector regulatory regime is unpredictable. Uganda communications commission (UCC) the sector’s regulator is more reactive in the implementation of new policies. The SIM card registration project was costly to the telecoms and could be repeated after successful national identity card project, the sale of Warid to Airtel is said to have had a negative impact on the competitiveness of other telecoms.
Of course it is not a good idea for an existing telecom company to buy another existing one for obvious reasons. And recently the Ministry of Information and National Guidance issued a decree that all broadcasting media houses must allocate one hour of prime time to government free of charge! UCC went ahead to require broadcasters to do so. Such announcements are seen as anti-competitive and tend to increase the political and regulatory risk for investors.
The rise and rise of MTN
As Orange was looking for a suitor, MTN was focusing on realizing their strategy: make MTN mobile money the best money transfer service in terms of access, security and one-stop-center. MTN has implemented several enhancements to their mobile money service and have decided to keep quiet for the customer to just enjoy an improved experience. With over 9.5m customers, MTN is growing in a market where others are finding it hard even to just break-even.
For example, if you send money to a wrong number (with a digital missing), the money is returned automatically to the sending number within 24 hours. This saves you time and effort in contacting helpline to reverse the transaction plus the pain of having to explain yourself. There are also more security improvements, and I love to use MTN mobile money.
When Airtel bought Warid, MTN decided to consolidate and leverage on their existing subscription base. Importantly, they introduced MTN Business with a promise of “With the right partner, everything is possible.” MTN Business has been a game changer. With a reported cumulative investment to about Ugx. 1.7 Trillion since inception in 1998 and the country’s leading tax payer. It is not a surprise that MTN Uganda is the country’s top brand.
For long, the company has boasted of the biggest telecom infrastructure and the truly local telecom. However, lack of a winning strategy, poor marketing execution and constant changes in top leadership as a result of diverse shareholder interests has failed UTL to optimize use of their infrastructure. The bad news is it is getting obsolete too fast.
First they had an engineer as CEO. He was brilliant and pioneered 3G technology in Uganda. Unfortunately, he did not understand that great products need great investment in marketing. Their 3G investment failed to take up until a year later when MTN showed them how it is done. And the rest is history. In the face of that failed investment, UTL tried to restructure and the consultants had the best laugh: they diagnosed the problem in marketing. And a new improve marketing budget was put up. Unfortunately, they brought in someone from Zambia (a francophone) to head marketing. The result was marketing messages that did not connect with the local clientele. If you want to sell in Buganda, you must craft your messages with a local touch of the traditions and culture of the people.
And now, UTL has a new board member – Stephen Kaboya – a former banker. We hope his savviness with international markets and stock trading will bring the much needed change at UTL. He joins UTL which has just got a new CEO, Mr. Ali Amir who replaced Holliday who threw in a towel following alleged disagreements about UTL’s new strategic direction in light of intense competition. Holliday had replaced Abdulbaset Elazzabi, an engineer that had introduced great innovations but failed flat in customer service and marketing. Now UTL is trying to restructure again, hope this time they get it right. Their marketing’s top honcho is Mr. Ameer Kamal Arif and already seems to have a lot on his plate. His starting point should be the company’s website that seems to have more dead links than customer testimonials, on-line helpline and social network optimisation.
In my next post, we enter Airtel and the thinking of the new CEO.