By John V Sserwaniko
Debbie Wule is a civically very active citizen who often comments and gives her views on topical issues. And true to his/her character, Wule was among those who commented on our Monday story entitled “MTN, UTL PARTNER TO BRING DOWN RETAIL CALLING RATES.” Wule’s point, which ironically is actually is shared by many other people, was to the effect that MTN is desperate to get the UCC renew their license and that gestures of this nature are calculated to cajole the public opinion not to be angry when UCC finally announces the license renewal. That UCC pronouncement is expected in May which is next month.
WHY THIS ISN’T TRUE;
From what we know, MTN is one entity that qualifies to be described as too big to fail the UCC licensing test; notwithstanding all their weaknesses and the public outcry there is against them. This story will focus on what makes the South African telecom giant too big to fail to the extent that an influential female NRM MP recently told this writer that “Bwana JV any story that hints on UCC cancelling the MTN license, please just ignore. It must be fake news as Trump would say because those guys have done and invested too much in Uganda for even Mzee to let them go.” The MP (we won’t name her because she isn’t comfortable her views being publicized) said it’s simply impossible and to her, the only way competitors can overcome MTN is when it chooses on its own volition to exit the Ugandan market. A number of things make the MTN Uganda story phenomenal including the fact that it was the 3rd to be licensed way back in 1998 but became number one within just one year. Back then, the GoU had just liberalized the telecom sector and there was international tendering that was supervised by World Bank. The local implementing agency was Privatization Unit and MTN’s bid was successful with Charles Mbire’s Investico being their local partner. It’s desirable that even when they have a lot of money, such international business entities must have local partners. It’s important; it’s good for their PR. Airtel (then Celtel) was one of the two telecom players MTN found in the market. This rapid growth, that is actually uncommon in any telecom market, was largely because of Celtel’s conservative practices which MTN challenged with a liberal approach. They for instance charged in local shillings where Celtel charged in dollars. They originally had a 5 year trial period at the expiry of which (in 2004), UCC released their compliance report recommending extension of their license for another 15 years making it a total of 20 years. It’s this 20 year licensing period that is expiring the very reason why MTN CEO Wim Vanhelleputte recently led his team to UCC offices in Bugolobi where they faced the public as part of the scrutiny that must precede the license renewal. According to Harriet Kabogoza, the very pioneer Ugandan employee for MTN Uganda, the giant South African telecom has always been an equal opportunity employer where all workers stood equal chance and were subjected to equal treatment regardless of where one came from. As the telecom market leader, MTN today has 18,048,353 subscribers out of the total registered simcards of 32,207,783 subscribers in the whole market. CEO Wim says in the simcard registration and validation exercise, using NIRA-issued IDs, 3m MTN subscribed lines were switched off partly because of compliance requirements including registration applicants supplying incomplete data. This is something that affected all the other telecom operators, but at 3m MTN lost the highest. This 18m subscribers out of the total of 32m puts MTN way above 50% of the market; leaving the others like Airtel, Africell, UTL, Smart, K2, Vodafone, Smiles and Tangarine to share the rest.
INVESTING IN UGANDA;
CEO Wim says that, on average, MTN has annually been investing $70m (equaling Shs2.7trn) in its Ugandan network. This goes into network expansion to ensure customers continue enjoying high data traffic of the highest quality on the market. As of 2003, when UCC compliance report for the first 5 years came out giving MTN a clean bill of health, there existed only 240 telecom sites covering only 12% of the population. Today (15 years later) this has grown to 1,800 sites covering more than 90% of the population. Yet Wim says this is still work in progress as the target is to have 95% of the population covered in the next few years. 95% is the very best even globally because 100% population coverage is simply unachievable. Because of this vast investment in the network by MTN, Uganda now ranks number 2 in Africa when it comes to mitigating barriers that constrain entry into the telecom sector. It simply means some of the requisite masts infrastructure is now in place and new telecoms coming to invest in the Ugandan market don’t have to redo that investment because of what MTN has done for the benefit of everybody else. MTN has accomplished this gigantic step in proud partnership with American Tower Company (ATC). This partnership has been on since 2012. In Kenya, the market leader Safaricom has invested as much in network improvement but charges other telecoms using its infrastructure. MTN isn’t. Even when new entrants are coming to compete with it, they freely make use of the sharable infrastructure. Like Kenya’s Safaricom, MTN Uganda beats its competitors in market capitalization, revenue and infrastructure. Today we have over 9 licensed telecoms all of which can access and use 1000s of towers MTN has put in place and this, obviously, is way much cheaper than having to erect one’s own towers. To boost internet reception and access, MTN has laid over 5,000 KMs of cable that has been laid. This benefits not just MTN but many other stakeholders because it deepens entry and penetration into the data market making business starting cheaper for the new entrants than it was for MTN 20 years ago.
TAX CONTRIBUTION;
MTN, which effortlessly ranks among the top 5 tax payers notwithstanding endless assessment disputes with URA, has paid over Shs3.9trn in the last 20 years. Their average tax bill has annually averaged at around Shs450bn, actually making them number one tax payer in Uganda. This perhaps is what the female NRM MP had in mind (as quoted above) when she told this writer that even if UCC boss Godfrey Mutabazi was to chop wires and kick them out, President Museveni would intervene to have them stay. Yet that isn’t all. MTN also makes the annual payment of Shs121bn to UCC as its mandatory contribution (all telecos do) towards the Rural Communications Development Fund (RCDF). MTN also annually pays Shs94bn as spectrum fees to UCC and their CEO Wim reflects on the irony that they are “allocated less than 15% of the spectrum space to serve more than 50% of the telecom market.” He wishes UCC can allocate them more spectrum space on the strength of their market share. When it comes to job opportunities, MTN employs more than 1,250 Ugandans directly and pioneer Ugandan employee Harriet Kabogoza (was PA to CEO from day one) says more than 3,000 Ugandans have severally worked with MTN as direct employees since inception in 1998. Besides the direct employees, there are more than 150,000 mobile money agents that are actively engaged 24/7 across the country. On top of them, you have the airtime retailers and all these combined, monthly share over Shs20bn which MTN pays them as commission fees. This enables them to support their families, develop and educate their children. When it comes to skills development, MTN Uganda has been renowned to be the undisputed number one in the region. The industry within the region always looks at MTN Uganda for talent identification whenever they go head-hunting. Examples include Chief Technical Officer (TCO) Gurdion Kyomuhera, Keith Turkei (head sales at MTN Africa Group level) and Dorcus Muhwezi who heads the Customer Experience Department. These are Ugandan corporates in whose career development MTN Uganda has heavily invested making them very competitive at Group level. The CEO Wim says in total, over 15 Ugandans currently work in top Group positions serving 22 other African countries where the MTN Group has a presence. Many Ugandans have been trained in ICT as part of the MTN broader CSR initiative.
MORE ON THE CSR;
Still on CSR, the MTN has over the years become renowned for events like the MTN Marathon whose proceeds (in hundreds of millions) are invested back to support community causes and this is good for them as a responsible corporate citizen doing business in Uganda. Critics though remain outspoken questioning the wisdom behind spending Shs1bn publicizing a CSR event from which only Shs800m is going to be realized. “Its high time we reconsider and shift from this model. As it is today, the Marathon is good for the company giving it positive publicity than it is for the community we purport to do it for. If we are genuine why don’t we directly inject the Shs1bn into the community than spending it in media adverts and other logistics towards the Marathon whose proceeds have rarely exceeded Shs800m?” wonders a disgruntled MTN insider who spoke to us anonymously. They have also supported Uganda Cranes until Airtel came and took it over. Still in sports, they support Rugby injecting colossal sums of money in sponsorship deals. Wim says the MTN CSR contribution has been more pronounced in the music industry than in any other thing. He reflects on the musical concerts like Ekiggunda Kya radio Simba at which thousands of Ugandans annually gather to watch their country’s musical talent. Yet there are also lots of musicians they have sponsored directly and Wim insists the story of the Ugandan music industry would totally have been different if MTN never operated in the Ugandan market. There is also MTN Foundation under which campaigns like the very impactful “21 days of Yellow Cares” are annually held. Wim says that under the MTN Foundation, the company annually invests over Shs5bn to pro-Ugandan causes relating to education and health. He brags that on matters regarding CSR, he has no doubt other companies have always copied MTN practices. As was manifested in the recent interconnection rate deal with UTL, MTN has always championed industry partnerships aimed at price reduction for the consumer.
AND THE CHALLENGES?
Wim believes much more progress would have been made if it wasn’t for UCC’s reluctance/refusal or inability to allocate them more than 15% of the spectrum space. Unfortunately, it’s a challenge UCC doesn’t intend to help them overcome anytime soon as the spectrum space is strictly limited and inelastic yet must be equitably shared by all telecom operators. They must also overcome RAMPANT fuel and copper wire thefts as well as cable fiber thefts which disrupt their network quality sometimes. Wim implores government to strictly criminalize these practices because they greatly hurt their operations as MTN. Asked what they intend to do should UCC grant them license extension for another 10 years, Wim says they are going to prioritize investment in the data network to ensure up to 95% of the population gets covered with the 4G network from the current 50%. The CEO says this plan is achievable and realizable by 2020 meaning they need just two years from now. He also says they are the only telecom that hasn’t outsourced their call center services and this is going to be consolidated. The CEO says this is deliberate because they believe in best customer experiences and the best way to guarantee this is when “core deliverables” like call center services is done in-house. Wim also promises to introduce more innovations regarding the mobile money service because this is key to deepening the digital economy that is increasingly becoming the trendiest way to transact business.
MOST CONSISTENT N/WORK?
Wim also says that when considering their application for license renewal, UCC should judge them more generously because: “We [MTN] are the only network that has consistently operated in this market. For 20 years we haven’t changed our colors, names or even ownership. We have not sold and this shows we are responsible, consistent and determined investors in this market.” This clearly is a veiled attack on Airtel whose colors, ownership and brand name have kept changing over the years. For comments, call/text/whatsapp us on 0703164755!
