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 Monday, February 25, 2008

Reliable sources indicate that Vodacom is close to signing a deal with Libyan-owned Lap Green to take over its recently purchased operations in Rwanda and Uganda. A draft of the agreement clearly indicates that Vodacom would take over a majority stake and have technical control, whilst Lap Green would remain a significant minority shareholder.

If the deal comes off, it would make sense of much that so far has not made much sense. Libyaís Lap Green clearly has not lacked for money but has so far only sent in a small number of its own management personnel. As one person in the ISP sector in Uganda observed:"Not much has happened on the practical side and thereís no sign of change yet." From the Vodacom perspective, it would offer them two new territories after a long period of no new acquisitions.

The mobile market in Uganda is clearly the larger prize with an estimated 4.5 million subscribers. Currently, utl is the smallest player after MTN with 1.25 million subscribers and Celtel with 1.2 million subscribers. The Celtel operation, which used to be in poor shape, is now powering ahead and becoming a serious challenger for market leadership.

The latest entrant Warid seems to have acquired 20-30,000 subscribers in its two week existence but does not yet seem to have set the market alight. MTN introduced a pre-emptive 14% drop in its tariffs and Warid opened with slightly lower tariffs. Competitors acknowledge that it has good network coverage but that it has no particular local insight and only a narrow product range. Prices still seem set to fall further and there is the makings of a price war when the fifth operator HITS finally enters the market. Optimistically, this might be in May of this year.

Meanwhile, Uganda is only the latest country to join the 3G arms race. Both Celtel and MTN are installing 3G, although the latter is only likely to have it in Kampala and around Entebbe Airport. MTN has 65,000 subscribers on a combination of its EDGE upgrade and its Wi-MAX fixed broadband locations in 51 Ugandan towns. Achieved download speeds on both are in the region of 250 kbps. It has found that introducing a 3G network has meant finding new sites to ensure sufficient coverage.

As MTNís CEO Erik van Veene told us:"We are really doing a couple of laps round the track before the fibre cable arrives." It hopes to be able to offer cheaper local pricing so as to encourage local hosting and content.

Source: Balancing Act.

3G | Africa | Mobile | Operators