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Internet wars: Telecom ‘elephants’ fight but customers have the last smile

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When giant telecoms engage in internet data wars, the old saying that when two elephants fight, the grass suffers does not apply. Not even close, for in this case, the grass (read customers/subscribers) are grinning ear to ear. At best, every customer would wish for such a fight to be eternal.

That internet is the next big thing is no longer a story for the future. Even though ‘voice is still king,’ internet represents both the present and the future.

Happenings in the telecom industry in the last two weeks further proved that with voice battles almost sealed by Airtel and MTN, data is the product for every player to favorably compete for market share.

In just a week, all the major telecoms had adjusted their data prices and bundle sizes. It all started on 24th January when during a press conference to announce a $50 million investment in network upgrade, Airtel pronounced that it had cut its data rates by more than 60%. Its daily data bundles were adjusted with the data for Shs500 increasing from 25mbs to 40mbs, while data for Shs1000 rose from 60mb to 100mbs. Airtel also made major adjustments on its weekly and month data propositions.

While this was sinking in to the hearts of data lovers, mainly those using Airtel, MTN reacted. It changed its daily data bundles too. For Shs500, users now get 40mbs not 20mbs while for Shs1000, you now get 100mbs not 50mbs like it was previously.

Within days, Africell also revised its data rates. In what they named double your data bundle, they are now offering 50mbs for Shs500 not the previous 25mbs for the same. Plus, with Shs1000, Africell customers now get 120mbs, from the previous 60mbs.

But that is not all, every Wednesday, MTN and Africell are tussling it out with same bundle sizes and costs. For the past two weeks, MTN Uganda has, through its Gagaaa Wednesday promotion, been giving its My MTN APP users a chance to buy 3GB valid for a day at Shs3500 only.

On the other hand, Africell, through its Don’t Be Cheated Wednesday drive, has in the same period been selling 3.5GB valid for a day at the same rate as MTN – Shs3500. The major difference is that the Africell offer is open to all its data clientele while the MTN offer is restricted to only My MTN APP users.

While unveiling these new data rates, Airtel Uganda managing director VG Somasekhar noted that the new data sizes and costs were intended to give his customers a customized, simplified and affordable internet experience.

“The new data bundles are priced to meet the different needs of all Airtel customers; whether daily, weekly or monthly. We are making internet affordable and available for everyone, “he said.

Internet usage has been fast growing in recent years. At the end of 2017, Uganda had 16.77 Internet Users, representing a 41 per cent penetration. This number is expected to further grow following these recent pricing changes.

According to Uganda Communications Commission (UCC), the final data user is the biggest winner in all these price and bundle size battles.

In a chat this week, Mr Fred Otunnu, the UCC Corporate Affairs Director noted that the data price cuts will further increase the uptake, usage and penetration of internet across the country, something that will develop Uganda.

“Since the average telecommunications consumer is extremely price elastic; that is to say a reduction in pricing for communication services, increases the consumption of the said services by a proportion far greater than that of the price reduction, then these price drops will with no doubt increase internet usage,’’ Otunnu said.

“Since data pricing is inversely related to demand for data based services, increased demand for data based services means the acquisition of the needed bandwidth for these services becomes cheaper. Cheaper bandwidth acquisition costs translates into even lower costs to consumers leading to a highly beneficial self reinforcing loop of benefits to society as a whole.’’

With reports fuelling up that some companies like Smile, Smart and Vodafone are on the verge of closing down, Africell continuing to gain momentum and competition between MTN and Airtel at its record best, it remains to be seen who will win this data war.

While we are unable to predict who will come out victorious, we know for the fact that whoever wins Uganda’s data wars will have a very big say in who is the market leader in the near future.

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