The idea of having mobile virtual network operators in Uganda is not new, perhaps before I dive deep into talking about MVNOs let’s try to understand what this term means.
MVNOs (Mobile Virtual Network Operators) are a cropping breed of telecom companies who may not own the wireless spectrum from the regulator UCC, or wireless infrastructure (also termed pipe, in conversational terms) but give a virtual appearance of owning a wireless network. Basically they ride on another network’s infrastructure and enjoy most of the benefits that come with it. These operators lease the 2G or 3G pipe or wireless capacity from traditional operators and then repackage it for a specific vertical industry application.
Main added value that MVNO provides is billing and customer care functions. In that sense MVNOs own the customers. Come companies become MVNOs just to fill up the Gap in technology that they lack. With so many telecom operators is Uganda, you will not be able to get any more FDD 2G or 3G spectrum available from UCC and that’s what most mobile phones support. So, new telecom companies are forced to enter MNVO agreements with the established telcos. Great, now that we have that out-of-the-way. Let’s see what the situation is like in Uganda.
List of MVNOs in Uganda
The table below shows a summary of traditional telecom networks and the MVNOs that ride on them. As you can see, some telcoms that have their own infrastructure like Vodafone and Smart Telecom have MNVO agreements with Uganda Telecom (UTL) in order to serve their clientele out of Kampala. Basically your phone will switch from Vodafone to UTL when your you are up-country, but as a customer you will never notice. This means that out of Kampala Vodafone and Smart Telecom run on UTL’s 2G and 3G network. Smart telecom have their own 2G and 3G license, so the plan is to roll-out their own network slowly as the ride on UTL for the time being. K2 Telecom is the one true MVNO, they totally own no infrastructure and solely depend on Africell/Orange’s network.
|Telecom Network||MVNO 1||MVNO 2|
|UTL||Vodafone 2G||*Smart Telecom|
|Africell||K2 Telecom 2G/3G|
|Smart Telecom||Vodafone 3G|
* These MVNOs also come have National roaming agreements
Telecom giants MTN and Airtel have not signed up any known MVNO agreements so far, some would argue that they don’t have the capacity to handle another network’s burden since they are already congested with their own huge number of mobile subscriber. Alternatively, it could be their group policy or an anti-competition move, your guess is as good as mine. Unlike Vodafone, Smile Communications Uganda is playing it safe and specializing only on their 4G-LTE technology with no MVNO aspirations.
So how do these MVNOs compete?
When it comes to pricing, most MNVOs are always cheaper than the networks they ride on. Let’s take a look at some random examples below, when it comes to per second billing, UTL’s tick-tock charged at UGX 5 per second, while Vodafone and Smart Telecom is UGX 0.5 and UGX 4 per second respectively. And, while Africell is at UGX 7 per second, it’s MVNO K2 charges less at UGX 4 per second across all networks (off-net calls).
Per second Pricing to other networks (UGX)
UTL Vs Vodafone, Vs Smart Telecom
|UTL's Tick Tock||Vodafone||Smart Telecom|
Africell Vs K2
Almost all MVNO plans are prepaid plans, and therefore, they run on extremely low margins. As a cost conscious consumer, you will definitely win. You aren’t paying for a brand name, huge ad campaigns and associated acquisition costs, subsidized expensive smartphones, deadbeat customers who don’t pay (most MVNOs are prepaid), retail stores with staff, the cost of building new towers, servers, and a huge network, or any of that stuff.
You pay slightly above the wholesale rates at which network access is bought by the MVNO. In fact, customers of the big carriers pay more than the amount of customers of MVNO’s in most cases. This means more MVNOs are always welcome players on Uganda’s telecom scene.
Image Credit: Techjaja