Uganda Telecommunications Report Q3 2013 - New Study Released

Two of BMI's key views for Uganda's mobile market have played out since our last update. These are the likelihood for consolidation, which was confirmed by Airtel's bid and subsequent regulatory approval to acquire Warid Telecom, and the launch of commercial 4G LTE network services by MTN. We expect these developments, along with full implementation of mandatory SIM registration, to define competition dynamics in Uganda's mobile market over our forecast period, through to 2017. The Airtel- Warid merger could be the first of several mergers as we retain our view that the market is not capable of supporting more than five operators over the long term. Meanwhile, MTN's LTE network roll out will spur further investments in data networks as operators seek ways to diversify their revenue streams away from low-margin voice services.

Key Data

* The mobile market grew by 1.8% in Q113, compared with 3.5% over the same period in 2012.
* Mobile ARPU remained below US$4 in Q113 despite an uptick in mobile data subscriptions.
* The fixed-line market grew by 11.2% in 2012.

Full Report Details at
- http://www.fastmr.com/prod/607210_uganda_telecommunications_report_q3_2013.aspx?afid=303

Risk/Reward Ratings

Uganda climbed one place to 14th position in BMI's Q313 RRR table with an aggregate score of 41.5, up from 38.6 in the previous quarter. Uganda's highest score is in the country risks category, which reflects a positive real private consumption growth outlook during our forecast period, while its Industry Risk score was upgraded this quarter on the back of positive regulatory developments capable of boosting competition and driving growth.

Key Trends & Developments

In April 2013, Airtel announced it had entered into a definitive agreement to acquire Warid Uganda. The two are the second and third largest mobile operators in Uganda, and the merger will almost double Airtel's market share and put it in a good position to challenge MTN as market leader. The deal won regulatory approval in May 2013.

In April 2013, MTN Uganda launched its 4G LTE network in Kampala. Besides Smile Telecoms, which only provides data services, MTN is the first telecoms operator to offer 4G in Uganda. The development of the LTE network is part of MTN Uganda's larger plan to expand and improve its network coverage. The operator invested about US$80mn in 2012, bringing its number of network sites to 1,100 and total length of fibre to 2,800km. It plans to invest a further US$70mn on infrastructure in 2013, including deploying another 400km of fibre between Kampala and Kyenjojo district in western Uganda. At launch, 20 locations were fully integrated on MTN's LTE network. The service is available throughout greater Kampala on 4Genabled dongles and will be extended to other towns in the near future.

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