Rwanda's SIM card sales dropped by more than half in September compared to August.
Telecom operators - MTN and Tigo - the only mobile service providers in the country, sold 56 781 SIM cards in September compared to 122 718 in August. This took the number of active mobile subscriptions to 4 304 532 in September from 4 247 751 in August. Active users are those whose SIM cards are in use for three months.
At the same time, the mobile penetration rate rose to 40.2% in September from 39.6% the month before, according to a recent report by the telecoms regulator, the Rwanda Utilities Regulatory Agency (RURA).
The report notes that MTN, which has 66.6% of Rwanda's mobile market share, added 35 723 new subscribers, taking its total to 2.8 million mobile subscribers, while Tigo, which has 33.4% of the market, gained another 21 058 users, increasing its total subscription base to 1.4 million.
Meanwhile, in August, Tigo had gained 117 480 new users, beating MTN, which gained only 5 238. At that time, Tigo was running attractive promotions that offered more talk time for little money compared to MTN, which has the highest rates so far. The two companies and RURA have reserved comment on the published statistics.
The sharp increase in mobile subscriptions in August could be attributed to the revocation of a mobile licence owned by Rwandatel, on 8 April, for failure to honour the licence obligations.
Rwandatel, Rwanda's oldest telecoms company that had been privatised to LAP, Libya's investment arm, had about 500 000 mobile subscribers when its licence was revoked. This provided MTN and Tigo with an opportunity to tap into the disconnected user numbers, pushing their mobile subscriptions up.
The sharp decrease in SIM card uptake in September compared to August could be because Rwandatel's disconnected users had already reconnected with either MTN or Tigo, a situation that left little demand for SIM cards.
In an earlier interview, R'egis Gatarayiha, RURA's DG, said Rwanda's addressable market for mobile growth was also declining sharply, despite the fact that the country aims to have six million users by the end of 2012. He said more than 40% of the market had already been covered, and it was becoming tougher for operators to attract more subscribers.
This, he explained, was a result of competition among the telecoms operators, which has seen tariffs decreasing, enabling more people, even the poor, to afford mobile communication.
Gatarayiha believes competition isn't yet efficient, but he expects it to climax after Airtel joins the market early next year. Airtel was licensed in September to operate a mobile network in Rwanda. It paid $30 million for the licence and promised to invest an additional $100 million over the next three years.
Gatarayiha said Airtel's licence includes 2G and 3G networks. He said the company, which has operations in countries closely doing business with Rwanda, such as Uganda, Kenya, Tanzania and the Democratic Republic of Congo, promised to cover 85% of the country in the first year, and 95% over the next five years.
Airtel's entry comes at a time when the interconnection rate has dropped and will continue to do so over time.
Gatarayiha said the rate was slashed to Rwf35.79 ($0.0601513) at the beginning of July, from Rwf40 ($0.0672269) per call made, and noted that it will continue to decrease gradually.
High interconnection rates have been blamed for limiting mobile growth, given the fact that users could not afford the cost of calling a different network, which currently stands at Rwf90 ($0.151261) per minute.
This is, however, expected to drop, firstly because of competition, and secondly because interconnection is also low.
Michael Okwiri, Airtel's corporate communications manager, in Nairobi, Kenya, said lower interconnection rates was an enabler for mobile growth because it allows users to make calls, even on different networks, at low cost.
Since Rwanda has reduced the rate and intends to bring it down further, Airtel could benefit, and may launch with affordable cross-network call rates, which could prompt other operators to react.
However, it might face agony in raising revenue as the average revenue per user (ARPU) in Rwanda has reduced significantly from $17 in 2009 to between $3 and $4 in 2011.
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