Hence the company, a private equity organisation registered in the UAE, recently took a strategic decision to focus on investment in Africa, particularly in the telephony, energy, mining and real estate fields.
In the telecoms field, the company aims to sign up 10 million subscribers in Africa within two years, the first step in achieving that aim being the recent award of a universal service licence in Uganda. The company’s Hits Telecom Uganda, was awarded the licence last month, allowing it to operate a range of access technologies including CDMA, GSM, WCDMA and WiMAX.
Their investment amounts to US$150 million in the network, with access to a further US$50 million from MEAIC investors should this be required.
Veritas Communications is Hits Telecom Uganda’s local partner. Veritas, under the chairmanship of Abu Mukasa, a well-established entrepreneur, represents a number of companies operating in the country.
Mukasa says that telecoms services in Uganda are appalling but that the present situation presents a significant opportunity. He says that as the country has the youngest population in the world, with an average age of 15.5 years, and only 2.4 million people as subscribers to telecoms services, he reckons the remaining addressable market for telecoms connection in the country is at least a further 7 or 8 million.
Uganda’s liberalization policy in the field of telecoms has led to objections by the present players in the market - Uganda Telecom Limited, MTN and Celtel – which means that new entrants such as Hits will have to demonstrate to the Ugandan government that their present course is the right one.
Warid Telecom, akin to Hits and backed by a UAE-registered investment company and the ruling family, has also been awarded a similar concession as Hits Telecom’s, but the latter’s management believes their company is better positioned to make a success of the venture given their allocation of GSM spectrum in the 1800MHz band.
Mukasa says spectrum availability limits the number of operators in Uganda and feels there is room only for one more operator after themselves, and he reckons Warid is probably the most likely candidate.
MEAIC is in discussions with a series of interested parties for investment in telecoms opportunities including in Nigeria, Niger, Burundi, the Democratic Republic of Congo and Ethiopia and management expects their target of 10 million new subscribers to be reached over the next 18 months to two years across 6 or 7 networks.
The company believes that the strength in retail channel development and the active segmentation of the market will be a winning proposition in Uganda as it will bring value to the market. For instance, Uganda’s subscribers will know exactly what they are paying for, and will not be charged for anything they have not used – as can happen in per-minute billing, for instance.
Hits Telecom has ordered a million mobile phones from Nokia, and will be giving priority to improving coverage in the country; presently many Ugandans are unhappy with the coverage of current networks.
By all accounts, Ugandans, both private citizens and those in government, are looking forward to the new developments, in the expectation that the advent of new operators will help push service levels, and costs down.
