2010 Uganda Communications Statistics

Page 1

2009/10 Post and Telecommunications Market Review


Introduction „

It is yet again that time of the year that the UCC, takes time to review the industry performance, key developments and challenges for the previous Financial year.

„

This review is for the period June 2009 to June 2010. It takes a look at: 1. 2. 3. 4. 5.

The sector performance at a macro economic level in terms of growth and contribution to GDP as well as a cross sector performance comparison Industry financial performance with a year to year revenue and investment comparisons Trends in post and telecommunications service growth ad penetration Post and telecommunications price trends and service comparisons Key regulatory developments

09/10 Annual Review

2


Macro Economic Performance Following the global financial melt down of 2008, with GDP contraction of more than 3.2% in advanced economies and a paltry 2.6% growth in developing economies, the FY 2009/10 saw a resumption in growth with an average of 4.7% in the sub Saharan Africa . (Source: IMF)

Economic Growth Rates (%) for Select Economies 6.4 5.8 5.4

4.1

Uganda in particular posted a growth rates of 5.8%, a score only second to Tanzania in the East African region.

3.9

In terms of composition, services accounted for 50.7% of GDP while industry and agriculture contributed 25% and 15% respectively in Uganda.

2.6

Uganda

South Africa

09/10 Annual Review

Kenya

Burundi

Rwanda Tanzania

3


GDP Vs Post & Telecommunication Growth Rates

In a reversal of declining growth rates posted in the previous two financial years, the post & telecommunications subsector posted a 30% growth rate in 2009/10 up from the 19.8% growth realised in 2008/09 More important to note is that this growth was realised amidst declining GDP growth rates in the aftermath of the global economic crisis The growth rate is attributed to increased investment in the telecommunications subsector and the diversification of product (data and Value added services) in the market.

GDP and Communications Sector % Growth Rates, 2009/10 26

29

30 23

20

8.40 10.80

2005/06

8.70

2006/07

2007/08

Post & Telecommunications

09/10 Annual Review

7.20

2008/09

5.80

2009/10

GDP Growth Rate

4


Inflation „

„

The transport & communication sector realised relative price stability with only 1.57% increase compared to the 9.4% in the overall country CPI as shown in the adjacent figure Specific to the Communications sector, price drops were realised in the broadband and voice telephone segments on the account of drop in cost of international bandwidth and increasing competition in the market.

Annual %age Price Change % price change transport & comm Annual Overall price % change

14.1

9.4

9.06 7.4

7.3 5.61

1.57 2006/07

09/10 Annual Review

2007/08

2008/09

2009/10

5


Financial Performance

In Oct 2009, MTN (Group) increased its stake in MTN Uganda from 95% to 96% at a consideration of USD 6.5 Million

In Nov 2009, MTN Group acquired 20% interest in Belgacom International Carrier Services a company offering wholesale carrier services for voice and data. This may have advance implications in the international market in Uganda and the region as whole.

In Nov 2009, Essar Group acquired 51% equity in Warid Telecom Uganda from the Dhabi Group for a reported consideration of USD 160 Million. Essar Telecom is a subsidiary of India’s Essar group with 33% interest in Vodafone Essar of India and a controlling stake in YU telecom in Kenya

Bharti Airtel acquired control of Celtel Uganda Ltd following Mobile Telecommunications Company of Kuwait’s 100% sale of its Zain Africa BV subsidiary to Bharti for a reported consideration of USD 10.7 Billion

Bharti Airtel now has a footprint in 15 African countries including Kenya and Tanzania

Mergers & Acquisition 2009/10 has seen the industry post record financial activity characterised by takeovers, mergers and acquisitions. Below are some highlights;

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Financial Performance Credit Financing Aside from takeovers, the industry has continued to attract investment in the form of credit financing. Below are some highlights in telecom finance;

In the first half of the year, MTN Uganda secured a USD 100 Million credit facility from a syndicate of local banks that included Barclays bank, KCB, Standard Chartered and Stanbic bank as the designated Lead Arranger. ZTE a provider of network solutions for a number of licensees entered into a strategic partnership with the Export – Import bank of China for a USD 10 Billion credit line. This is in addition to an earlier USD 15 Billion from the China development Bank

The credit line is to partly assist ZTE in financing roll out projects in emerging markets like Uganda.

To date ZTE has partnered to provide network solutions to the following licensees;

09/10 Annual Review

TMP Uganda Ltd (T.A Broadband Company) Sure Telecom Anupam Globalsoft Uganda Ltd Smartel Uganda Ltd Augere Uganda Ltd 7


Financial Performance Credit Financing Huawei, another infrastructure and network solutions provider in the market secured a USD 30 Billion credit line from the China development Bank.

This facility is to help in the financing of projects by extension of low interest project loans to its customers in emerging markets and those economies adversely affected by the credit crunch.

To date, Huawei’s clientele in the Uganda communications market include; MTN Uganda Ltd Smile Communications Uganda Telecom Ltd Warid Telecom Uganda Ltd

The availability of these credit lines should help solve financing bottlenecks for newly licensed providers as well network enhancement by the incumbents.

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Financial Performance Capital Investment An estimated USD 270 million was invested in the sector during the period under review. The bulk of the investment expenditure was in the roll out of mobile broadband solutions and other internet related infrastructure. Investment in the sector is expected to grow in the new FY as the new service provider expand their networks coupled with expenditure for the 3rd phase of the national backbone infrastructure network

Industry Investment Expenditure, 2009, USD 367,809,156 326,563,198 270,751,740

73,499,693 49,859,493

2005

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2006

2007

2008

2009

9


Financial Performance – Industry Revenues Industry Revenues, USD 2009 800,000,000

700,000,000

600,000,000

Axis Title

500,000,000

400,000,000

300,000,000

200,000,000

100,000,000

Industry Revenues

2005

2006

2007

2008

2009

303,735,325

364,530,942

582,781,898

640,490,217

669,030,885

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10


Financial Performance – Industry Revenues

Gross margins increased for all operators. A look at the profitability ratios however show that the some major cellular operators registered negative profitability.

This is mainly the due to the heavy capital expenditure by these operators and new entrants as they continue to rolled out and upgrade their networks.

The industry realised an estimated UGX 1.4 trillion in revenues which translates into a 7.7% increase in total earnings. However the depreciation of the Shs against the dollar during the year implies a year on year growth rate of 4.5% compared to the 9.9% growth realised in the preceding year

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Revenue Drivers

The mobile market accounted for 63% of the telecommunications revenue followed by the fixed line segment. Of emerging importance are the handset revenues as operators have aggressively entered the handset market with each retailing own brand of low cost handsets. Value added Services are also growing in importance The entry of new operators has resulted in the emergency of a whole sale infrastructure market as new entrants adopt the infrastructure leasing approach to market entry

Internet Services Revenue 4%

Intnl termination, telefax & Roaming 2%

Domestic interconnec t 16%

Other revenues Fixed line 1% Revenue 14%

Cellular Operations Revenue 63%

Telco Revenue Distribution, 2009

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12


Telecommunications Tax Contribution Telecommunications Tax Revenue, 09/10 Excise

VAT

PAYE 25,437,844,363

24,450,436,583 24,330,735,544

23,717,674,968

25,705,730,094 24,179,688,192

23,782,098,114 20,675,185,490

8,607,292,416 5,661,146,412

5,356,760,284 2,937,017,905

3Q09

4Q09

1Q10

2Q10

There was a total increase in tax revenue realised from the communications sector in FY 2009/ 2010 with close to 215 billion shillings collected from the sector. This means that the communications sector remains the number 1 tax revenue for government. Collection where largely from VAT and Excise duty. 09/10 Annual Review

13


PERFORMANCE AT MICRO LEVEL THE TELECOMMUNICATIONS SUBSECTOR

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Service Providers

The biggest highlight in the period under review was the launch of commercial services by Smile Communications Uganda Ltd. Smile Communications Ltd, a subsidiary of Smile Telecoms Holdings Ltd offers IP based wireless solutions. They are presently offering Fixed wireless services in Kampala and expanding to the outcast. An additional 3 companies were issued PIP licences, 4 in the PSP Voice and Data category. A list of all licensed providers can be obtained from the link below; www.ucc.co.ug/licensing

License Category

June 07

June June 08 09

June 10

NTO

2

2

2

2

PIP

1

13

23

26

PSP Voice and Data

14

19

32

36

PSP Capacity Resale

4

5

3

8

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Customer Growth

962,311 new subscribers registered in 2009/10 compared to 3,377,209 new connections realised in 2008/09. The decline in rate of subscriber add-ons may be an early indication of market saturation. Market penetration for voice is currently at 33.5% with a population coverage of close to 100%. Like in the preceding years, the mobile accounted for more than 90% of new connections with 910,000 new subs in the period under review In the fixed line segment most noticeable development is the continued growth of fixed wireless terminals accounting for more than 60% of total fixed lines at the end of the review period.

Fixed and Mobile Subscriptions, 2009/10 Fixed

Mobile

10,375,220 9,464,979

6,140,822

3,575,263 2,008,818 108,140

154,382

160,768

213,820

265,890

2005/06

2006/07

2007/08

2008/09

2009/10

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Annual Subscriptions Growth & Penetration Annual Telephone Subscriptions Growth & Penetration, 2009/10 12,000,000

40 35

10,000,000

30

Axis Title

8,000,000

25

6,000,000

20 15

4,000,000

10 2,000,000

-

5

2005/06

2006/07

2007/08

2008/09

2009/10

Subscribers

2,116,958

3,729,645

6,301,590

9,678,799

10,641,110

Penetration

7.7

13.2

21.2

31.6

33.5

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0

17


Telephone Subscriber Growth & Penetration Rates

On a quarter to quarter comparison, the industry posted an average quarterly customer growth rate of 4.7% with 6.5% customer growth registered the last two quarters of the year. The slight quarter to quarter improvement is attributed to the increase in competitive pricing strategies spearheaded by the new entrants.

Quarterly Subscriber Growth Rates and Penetration, June 2010 Growth Rate

31.6

31.8

Penetration

31.4

7.2

2Q09

3Q09

‐1.3 4Q09

32.7

33.5

6.5

6.5

1Q10

2Q10

‐9.8

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Annual Traffic Growth Telephone Traffic, Minutes 2006/7 -2009/10 7,000,000,000

„

6.6 billion minutes were posted in the FY 2009/10 compared to 5.5 billion minutes posted in 2008/09 The growth in traffic was the result of increased service penetration and usage resulting from increased promotions and the introduction of unlimited calling pricing schemes.

6,000,000,000

5,000,000,000

Minutes

„

4,000,000,000

3,000,000,000

2,000,000,000

1,000,000,000

On net

2006/07 1,639,952,358

2007/08 2,492,959,210

2008/09 5,413,033,985

2009/10 6,500,467,142

Off net

531,748,110

846,328,764

1,065,219,839

827,570,668

Intl Outgoing

73,481,695

111,220,349

147,318,146

107,229,800

09/10 Annual Review

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Traffic Growth – By Segment

Overall there was a 12.2% increase in total telephone traffic with the on net traffic segment posting 20.1% growth However there were 22 & 27% volume drops in the off net and internal outgoing segments respectively. The drop in off net traffic specifically the result of off net/ on net tariff disparity which create a clubbing effect and encourage multiple sim ownership. This disparity shall be reducing as a result of the announcement of uniform default interconnection rate by the UCC.

Traffic Growth Rates by Segment Overall Traffic Growth

Onnet Traffic Growth

Offnet Traffic Growth

Intl Outgoing Traffic Growth

117.1 92.0

53.7 52.0

59.2 51.4 25.9

32.5 20.1 12.2

2007/08

2008/09

2009/10 -22.3

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-27.2

20


Traffic Distribution Domestic Traffic Distribution, 08/09 On net

Off net

Domestic Traffic Distribution, 09/10

Intl Out Intl Outgoing 2%

2%

Off net 11%

16%

On net 87%

82%

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21


Tariff Movements

The first quarter of the year saw slight hikes in permanent tariffs with Warid, UTL & MTN raising on net and off net prices by 20 – 30/=. These hikes were a result of sustained depreciation of the UGX against the USD as well as fuel increments These were however countered by a series of promotional campaigns and new tariff plans that included; - Reintroduction of Warid’s Double the Fun with revised weekly rental - Zain’s Spend and Win - Zain’s Kika New tariff permanent tariff plans launched included; - Warid’s Pakalast offering (July 2009) - Orange Gyekiri (March 2010) - Zain Flexxy

UTL

Warid

Zain

MTN

Orange

09/10 Annual Review

Profile

Destina tion

June 09 June 10

UT Std

On net

280

310

Off net

490

440

On net

299

329

Off net

299

329

On net

400

400

Off net

400

400

On net

320

340

Off net

480

500

On net

310

290

Off net

310

290

Per Minute

Zain 39

PayGo Std

Per Minute

22


Tariff Movements - Contd

On net Tariff Movts June 09 - June 10 Jun-09

Jun-10

Jun-09

400400

310 280

Jun-10

490 340 320

329 299

Off net Tariff Movts, June 09 - June 10 480

500

440 400400

310 290 329

310

299

UTL Std

Warid Per Minute

Zain 39

MTN PayGo Std

Orange

UTL Std

09/10 Annual Review

Warid Per Minute

Zain 39

MTN PayGo Std

290

Orange

23


Year on Year Tariff Movement Average Tariff Movements 06/07 - 09/10 06/07

07/08

08/09

09/10 730

540

512

487

504

433 395 334

322

On net

396

392

334

Off net

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Intnl

24


Internet and Data Services

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25


Service Providers

New entrants in data / internet market segment during the period under review included;

Foris Telecom, a subsidiary of Israel based Foris telecom Group offering Wimax broadband solutions. Maisha Networks a purely indigenous PSP licensee offering VSAT and wireless broadband solutions Roke Telecom a PSP provider previously offering carrier services now offering broadband on metro fibre and the Gigabit Passive Optical Network (GPON) architecture

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Service Providers Technology Platform

Service Providers

3G, GPRS and CDMA

• UTL • MTN • Zain • Warid • Orange Uganda Ltd

Fibre and DSL

• UTL • MTN • Kampala Siti Cable • Infocom • Roke Telecom

ISDN and Leased Lines

• UTL • MTN

VSAT

• Afsat Communications U Ltd • UTL • MTN • Africa Online U Ltd • Maisha Networks Uganda

Other Wireless (including Wimax)

• Foris Telecom (In) • Datanet • Infocom • Nomad Communications (Tangerine) • TMP (Broadband Company) 09/10 Annual Review • All Telcos

27


Broadband Capacity Growth „

International Bandwith Growth, 2009/10

The landing of the cable systems at the East African coast has been probably the single most important event in the broad market in recent years.

Down Link

Uplink

2,640.66 2,505.27

1,990.00

„

Resulting from this has been the spurt in growth of capacity with international bandwidth growing more than 5 fold during the review period.

1,650.00 1,200.00 850.00

Dec-09

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Mar-10

Jun-10

28


Internet Subscriptions and Users

The entry of new service providers, increased capacity investment in broadband by the telcos and have resulted in increased internet penetration and changes in the methods of access.

Consequently this translates an estimated 3.5 million internet users countywide

By the end of the year fixed internet subscriptions had climbed to 29,800 from 27,600 users at the beginning of the review period while mobile broadband connections were at an estimated 520,000 connections from 310,000 subscriptions

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Internet Subscriptions & Usage

Internet Subscriptions, 2008/09 Fixed Internet Subscriptions

Estimated Internet Users Estimated Internet Users

Mobile Internet Subscriptions 3,500,000 510,000 2,800,000 2,500,000 310,058

1,000,000

11,000

15,500

22,000

27,590

31,000

2006

2007

2008

June - 09

June - 10

287,600 2006

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2007

2008

June - 09

June - 10

30


Mobile Internet Prices

Mobile Internet Capacity Based Pricing, June 2010 500 MB

1GB

Unlimited Internet Monthly Fees and Modem Prices Dongle

3GB

Monthly Charge

150,000 200,000 165,000 90,000

85,000

110,000

68,000 49,000 39,200 25,000

Orange

25,000 15,000

Foris

45,000

90,000

80,000 60,000

45,000

24,000 25,000

MTN

Zain

UTL

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Warid

MTN

Zain

31


POST AND COURIER SERVICES

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32


Post and Courier Service Providers June 07

June 08

June 09

June 10

Major Postal

1

1

1

1

International Courier

5

6

6

7

Regional Courier

6

6

8

8

Domestic Courier

6

8

8

17

09/10 Annual Review

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Post & Courier Licensees

1 new International Courier license was issued to Pax Courier Services which was subsequently awarded by the local FedEx courier franchise previously held by the East African Courier Ltd

In the Regional Courier segment, Easy Coach, regional bus service was issued a regional license

In the domestic Courier market, the following were issued domestic licenses; - Homeland Courier Services - KK Coaches Ltd - Country Safaris - East African Parcel Handling U Ltd - Mubende Boda Boda Transport Industry Cooperative & Credit Society Ltd - Interstate Logistics - United Local Courier - M & A Courier

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Courier Rates for Select Destinations, June 2010 License

Kampala

Mbarara

Nairobi

UK

India

USA

Globex Express Courier

Intnl

3,500

15,000

N/A

45,000

60,000

68,000

DHL

Intnl

5,000

15,000

39,000

75,500

132,000

104,000

EMS/UPL

Intnl

3,000

5,000

10,000

45,000

45,000

88,000

Nation Carrier

Regional

3,000

N/A

10,000

45,000

45,000

88,000

Skynet U Ltd

Intnl

5,000

31,000

33,000

Easy Coach

Regional

N/A

N/A

10,000

N/A

N/A

N/A

TNT

Intnl

55,000

60,000

60,000

Daks Courier

Intnl

4,000

12,000

44,000

58,000

102,000

88,000

PAX

Intnl

5,000

10,000

44,000

56,000

09/10 Annual Review

83,000 35


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