essarlogoEssar Teleholdings, the telecom subsidiary of Mumbai-based Essar Global, has set up a 90:10 joint venture with a local firm Kenyan Telecom Uganda Ltd. The JV has received a licence to begin operations in Uganda. According to Mint, Essar will invest $200 million in the network and will launch in August this year.

Uganda Telecom Market

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For pan-Africa Telecom Operator MTN, the Ugandan telecom market has one of the least ARPUs in South and East Africa at $7, compared to $13 in Nigeria and $11 in Swaziland, if you go by South African operator MTN‘s records. In comparison, Indian ARPUs have been falling – in the December quarter, GSM ARPU was Rs. 220 or $4.7, which is lower than African ARPU.

Teledensity in Uganda was 29.47% and there were 8.55 million mobile connections as of December 2008, according to (report, PDF) the countrys Telecom Regulator Uganda Communications Commission, growing at 14% monthly. Teledensity is 39% now according to Pyramid Research.

SMS is highly popular in the state with 190 million text messages sent in the December quarter. The telecom commission in Uganda has noted that infrastructure sharing is emerging as an economically viable option for new entrants.

The other operators in the region are Uganda Telecom, Zain Telecom (which has been setting its sights on India), Abu Dhabi-based Warid Telecom and France Telecom’s Orange Uganda. Orange Uganda launched in March 2009 and has around 57,000 mobile connections in Uganda, and France Telecom has an overall base of 42.6 million in the country. Reliance Communications acquired Anupam Global Soft in 2008, and the company is expected to roll out its network soon.

Uganda is the second state in the continent where the Essar group has established its presence – the first being Kenya where it set up a joint venture with a Zimbabwe-based Econet Wireless International last year, according to ContentSutra.

Africa & India

Africa is becoming the destination for Indian operators – it has the potential to become another successful market like India with its low teledensity and vast area.

South Africa is called an immature, slowly stabilising market by its telecom regulator. It has a small number of players; one such is MTN, with which Bharti Airtel has been in merger talks recently, Business Line reports.  MTN claims a market share of 44% in Nigeria but is #2 in South Africa with 36% market share.

In technical aspects, Africa has overtaken India – Uganda Telecom rolled out a next generation network 3 years ago while our policy on NGNs is still not finalised. MTN is investing in 3G and is in the process of rolling out a next generation network backbone in Nigeria, Ghana and South Africa.

However, Indian telcos could confidently apply their lessons learnt in this market to their African operations. With a similar consumer diversity, large networks and prepaid-favouring userbase, cellular service providers have found another market that will help them grow rapidly, and combining the two markets will give them the leg up in the global telecom industry.

Essar Group

The Essar Group is into retailing of handsets with Mobile Store, publishing with Time Out magazines circulated in Delhi, Bangalore and Mumbai, and also has a  stake in US-based ecommerce firm Obopay. Essar also owns 33% stake in Vodafone Essar India, which added 2.77 million mobile connections in April. Essar also holds a 9.9% stake in Loop Telecom (previously BPL) and is in a feud with co-owner Vodafone Plc , which you can read about here.

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