Post, Broadcasting & Telecommunications Annual Market Review 2012/2013

Post, Broadcasting & Telecommunications Annual Market Review 2012/2013

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Contents 5 10 14 18 24 28 32 35 36 3

Overview Godfrey Mutabazi Executive Director This review presents the performance of the post, Broadcasting and telecommunication s market review for the Financial Year 2012/13. It includes the following; 1. National Economic Outlook 2. Financial performance highlights for 2012 3. Trends in subscriptions and penetration 4. Service Growth & Product developments 5. Internet & Data Services 6. Post and courier market 7. Broadcasting 8. Consumer Affairs 4

National Economic Outlook Transport and Communications Growth- by sub sectors - The Transport and communication activities grew by 10.4% in 2012/13 compared to the 11.7% in 2011/12. - With this growth, the transport and communication sub sector contributed to 5.1% to total Transport & Communications Growth - By sub sectors (%) 19.8 23.7 21.2 18.9 14.3 12.9 17.5 14.1 0.9 14.1 7.9 3.3 11.7 12.0 2.8 14.8 10.4 7.8 4.5 2008/9 2009/10 2010/11 2011/12 2012/13-3.6 Air Transport Road rail water. Transport and communication Posts and Telecommunications 5

Post and Telecommunication Growth Rates - The post and telecommunication sub sector registered a growth of 14.8% in the FY 2012/13 compared to the 18.9% growth realized by the end of the FY 2011/12. - This growth is largely driven by increasing competition in the sub sector, merger of key players and the increased dominance of the non voice services like Mobile money and VOIP applications. Post & Telecommunications Growth Rates, 2012/13 Post & Telecommunications Growth Rates 22.9 23.7 21.2 19.8 18.9 14.8 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 6

Post and Telecommunication Contribution to GDP - In terms of contribution to GDP, the Post and Telecommunication share of GDP slightly increased from 1.6% in 2011 to 1.9% in 2012. - This growth is attributed to the increasing investment in the telecommunication sub sector and over the top services) in Uganda. Post & Telecommunications Share of GDP, 2012 (UBOS) GDP share 2.9 3.1 3.0 1.9 1.6 2008 2009 2010 2011 2012 7

Telecommunication Tax revenue UGX 332 billion being collected in form of VAT, Excise and PAYE taxes in the FY 2012/13. This represents a 36% growth in year to year tax collections. This growth in tax collection was largely a result of ; - Increased service usage driven by the reduction of the termination rates - Multiple promotional offerings offered by the telecos during the FY. - And the increase usage of Mobile telecommunications based Financial services Annual Telecommunications Tax Revenue, shs Mil Excise VAT PAYE 154,869 134,723 113,319 98,001 94,278 100,750 98,330 68,245 22,563 30,643 33,252 43,138 2009/10 2010/11 2011/12 2012/13 8

Quarterly Tax Collections, FY 2012/13, Shs Mil Excise VAT PAYE 45,342 38,629 34,751 36,241 36,145 39,518 35,353 23,609 9,751 9,838 11,595 11,953 3Q12 4Q12 1Q13 2Q13 9

Sector Financial Performance Financial Performance Mergers & Acquisitions mergers and acquisitions in the Ugandan telecommunication industry. four. In April 2013, Liquid Telecom increased its stake in the internet connectivity across the EAC region with its takeover of Infocom Uganda. In February 2013, Ericsson and Telstra renewed their longstanding strategic partnership to enhance and expand LTE technology innovation, development and deployment. This renewed contract partnership was authenticated during the Mobile World Congress 2013 in Barcelona, Spain. 10

Telecommunication Industry Turnover For the second year in a row, the telecommunication industry has witnessed a growth in the gross turnover. In the 12 months ending December 2012, the industry realised gross revenues of approximately UGX. 1.9 trillion compared to UGX. 1.6 trillion for the year ending December 2011. This translated into a year on year growth rate of 18.8% compared to 15.3% year on year growth realized in 2011. infrastructure leasing and data services. However, this industry revenue growth has occurred within the context of the UGX currency devaluation vis-à-vis the USD. This devaluation of the UGX presents operational and continuity challenges to Ugandan telecommunications operators since some of their operational and capital expenditure including 11

Financial Performance Industry Revenues, 2012 Telecommunications Turnover and year on year Growth Rates, 2008-12 2,000 1,800 1,600 24.39 30.00 25.00 Shs Millions 1,400 1,200 1,000 800 600 17.58 13.26 15.30 18.49 20.00 15.00 10.00 400 200 5.00 2008 2009 2010 2011 2012 1,034,350,062 1,216,226,635 1,377,530,943 1,583,278,165 1,876,052,146 % Y on Y Growth rate 24.39 17.58 13.26 15.30 18.49 % Y on Y Growth rate 000) Financial Performance Highlights explained by growing operational expenditure driven by rising fuel prices, depreciating local telecom companies. Record net losses realized by a number of operators with only 2 of the 6 operators posting 12

Most of the operators reported poor liquidity positions, with current liabilities exceeding current assets thus casting uncertainty over their continued existence. The continued poor liquidity positions of most telcomms has led to continued working capital extensions from their parent companies and shareholders. 13

Service Growth and Penetration Developments in the Telecommunications Licenses market. K2 Telecom a locally owned company was awarded a Public Service Provider License to setup a Mobile Virtual Network K2 Telecom has gone ahead and established a partnership with Orange Uganda for the provision of wholesale network resources and services Jun 2011 June 2012 June 2013 NTO 2 2 2 Public Infrastructure Provider 24 24 24 34 35 36 & Data) Public Service Provider 7 7 7 14

Subscription Growth, 2012/13 Fixed 14,676,505 Mobile 15,535,989 16,665,310 9,464,979 10,375,220 213,820 265,890 342,624 330,989 207,474 2008/09 2009/10 2010/11 2011/12 2012/13 15

Subscription Growth Cont 1,005,806 new subscribers were registered in the FY 2012/13 compared to the 847,849 new connections made in 2011/12. Market penetration for voice is currently at 47.1% with a geographic coverage of close to 100%. Currently there is no place in Uganda where one is more than 3km from a telecommunications signal. Like in the preceding year, the mobile segment accounted for more than 100% of the new Fixed line segment continued to decline as a proportion of telecommunications connections, reflected in a percentage loss of 37.3% for the year under review. This large drop is accredited to whilst the converse is not true under review. 16

Annual Subscription Growth & Penetration, 2012/13 Annual Telephone Subscription growth & Penetration -2012/13 Subscriptions Teledensity 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 60 50 40 30 20 10 0 Subscriptions 6,301,590 9,678,799 10,641,110 15,019,129 15,866,978 16,872,784 Teledensity The growth in subscriptions translated into a year on year growth of 7.3% in 2012/13 from an annual growth of 6% recorded in 2011/12. Subsequently the national telephone penetration rose to 47.7 lines per 100 inhabitants from the This new growth in subscriptions after a slower growth in 2011/12 is attributed to; and other over the top services. - Consistent and attractive promotions plus special offers coupled with competitive retail tariffs could also have contributed to the increase in the subscriptions. 17

Traffic Growth The sector recorded a total of 16 billion billed minutes in the FY 2012/13 from the 13 billion minutes posted in the FY 2011/12. This translated into a 44.9% aggregate growth in billed minutes for the FY 2012/13. It should be 18

16 14 10 8 6 4 2 2009/10 2010/11 2011/12 2012/13 On net 6,500,467,142 9,385,078,373 11,113,108,107 14,001,765,798 Off net 8,217,570,668 3,042,261,143 1,715,570,229 1,758,354,212 Intl Outgoing 107,229,800 173,375,156 227,838,466 265,611,641 25.6%. posted in the preceding FY. the FY from the 31.4% registered in FY 2011/12. 19

267.6 69.5 44.4 61.7 3.8 18.6 31.4 22.6 25.8 2.5 16.6 2010/11 2011/12 43.6 2012/13 2% 13% 85% 87% 11% 2% On net Off net Intnl Outgoing 20

Roaming Minutes 2012/13 The FY registered a total of 139 million roaming minutes by foreign networks compared to the 77 million roaming minutes recorded in foreign networks. There has also been a decline in roaming partners from 538 GSM operators to 419 by the end of the FY from all the telecom service providers. 54,804,450 57,481,023 20,864,796 21,590,272 22,472,822 15,975,525 12,076,955 11,665,659 3Q12 4Q12 1Q13 2Q13 21

2500 2000 1500 1000 500 July - Dec 12 Jan - June 13 On net sms 687,341,678 2,026,184,640 Off net sms 79,304,384 63,598,194 Int nal Out 17,387,008 14,283,398 22

from 460 million minutes posted in the previous FY. This represents a 7.5% decline from the preceding FY. This overall decline might have been 460,067,065 398,551,096 425,731,507 2010/11 2011/12 2012/2013 23

2500 2000 Mobile Money Services 1500 1000 500 Mobile Money Subscriptions Vs Mobile Subscriptions The use of mobile money transfer service has continued to transform the way Ugandans do The number of mobile money registered subscriptions grew from 5.6 million by the end of the previous FY to 12.1 million subscribers recorded at the end of FY 2012/13. The proportion of mobile money subscribers to total mobile telephony subscribers has grown to 24

Registered Mobile Money Subscribers 18,000 16,000 72.7 80.0 70.0 14,000 12,000 54.2 60.0 50.0 10,000 8,000 6,000 4,000 2,000 17.2 36.5 40.0 30.0 20 10 Mobile money Dec - 11 Jun - 12 Dec - 12 Jun - 13 2,879,968 5,662,871 8,870,873 12,117,821 Subscriptions Mobile subscribers 16,696,992 15,535,989 16,356,387 16,665,310 M.M Subs per total Mob subs Mobile Money Penetration(%) 30.00 25.00 20.00 15.00 Mobile Money Subs Penetration 16.02 25.09 10.00 5.0 4.76 8.15 Dec-11 Jun - 12 Dec - 12 Jun - 13 25

Mobile Money Transactions Dec 2011 June 2012 Dec 2012 June 2013 No. of Transactions Value of 3,753tn 4,901tn 8,273 tn Transactions Balances on customer Accounts In the period under review, there has been a 67% growth in total value of transactions from UGX 4,901 trillion recorded a the end of the previous FY to UGX 8273 trillion. The number of transactions also increased from 94.5 million to 192.4 million as of June 2013. Balances on customer accounts continued to grow from UGX 47.7billion in June 2012 to UGX 124.4billion as indicated in the table above. Mobile money Charges, June 2013 Sending to a Registered User 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 MTN MMoney UTL M-Sente Airtel Money Warid Pesa Orange money 500-5,000 400-300 - 300 15,001-1,000,000 800 700 800 800 700 10,0001-2,000,000 800 700-1,200 700 2,000,001-4,000,000 800 700-2,000-26

Mobile Money Charges- June 2013 Sending to Non Registered User/Other Network Charges 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 MTN MMoney UTL M-Sente Airtel Money Warid Pesa Orange money 500-5,000 800-300 - 700 5,001-15,000 1,600 1,500 1,600 800 1,500 15,001-30,000 1,600 1500 1,600 900 1,500 30,001-60,000 2,000 1,900 1,600 900 2,000 60,001-125,000 3,700 3,500 3,700 900 3,700 125,001-250,000 7,200 6,800 7,200 900 7,000 250,001-500,000 10,000 9,000 10,000 1,300 10,000 500,001-1,000,000 19,000 18,000 19,000 2,100 18,000 27

Internet And Data Market Bandwidth Growth, June 2013. 30.0 25.0 20.0 15.0 10.0 5.0 8.0 7.0 6.0 5.0 4.0 3,0 2.0 1.0 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Total bandwith mbps bandwidth per million inhabitants There has been continued growth in total international bandwidth as the undersea cable systems terminating in Uganda increase capacity. By the end of the FY 2012/13, total international bandwidth in the country stood at 25,678.8 Mbps. This has encouraged and grown data usage and led to declining data prices 28

Fibre Optic Cable Coverage, June 2013 Company Route Udanda Telecom 20 258 220 MTN U Ltd 206 258 220 165 Warid Telecom 42 Airtel Uganda 40 Infocom 240 596 Roke Telekom 360 88 Uganda Electricity Transmission Company MoICTs -Government of Uganda. 1585 29

Internet Subscriptions & Usage Fixed & Mobile Internet Subscriptions, June 2013 40 100 Mobile internet subscriptions 35 30 25 20 15 10 98 96 94 92 90 88 86 Fixed internet subscriptions 5 84 Dec-11 Jun-12 Dec-12 Jun-13 82 Dec-11 Jun-12 Dec-12 Jun-13 Mobile internet subscriptions Fixed internet subscriptions 977,500 1,586,325 269,705 3,458,351 88,786 92,934 96,000 98,500 Estimated Internet Users Est Internet Users 6,800,000 5,700,000 6,200,000 4,662,240 4,800,000 Jun-11 Dec-11 Jun-12 Dec-12 June-13 30

Broadband Rates, June 2013 Modem prices Low Medium High Retail Modem Prices sh.25,000 sh.59,000 sh. 110,000 Monthly Bundle Rates 500 Mb 88 88 88 1Gb 21 22 22 Unlimited 78,315 80,440 80,440 Dedicated Speed Based Packages 512 kbps $ 280 $ 300 $ 450 1 mbps $ 600 $ 600 31

Post and Courier services Developments in the Post & Courier Licenses, June 2013 June 09 Jun-10 Jun-11 Jun-12 Jun-13 Major Postal 1 1 1 1 1 International Courier 6 7 8 8 8 Regional Courier 8 8 8 6 7 Domestic Courier 8 14 14 13 13 32

1,808 1,415 1,388 997 230 173 197 106 36 23 20 14 2009/10 2010/11 2011/12 2012/13 Domestic Ordinary letter post Domestic Registered Letter Post Domestic EMS available on the mobile telephony platforms have continued to diminish Postal mail volumes and revenues. Increased competition of the mobile money services are continuing to narrow demand of the traditional postal money order services. 33

90,991 74,219 100,181 81,102 87,579 53,974 56,799 41,346 12,168 9,809 3Q12 20,119 11,989 4Q12 19,679 3,008 1Q13 11,222 3,118 2Q13 East African Letter post Incoming European Letter post Incoming East African Letter post Outgoing European Letter post Outgoing Courier Rates for Select Domestic Destinations 500gm, June 2013 License Kampala Mbarara Arua Jinja East African Courier 6,500 15,600 19,500 10,400 EMS/UPL 3,000 5,000 9,000 5,000 G4S 7,800 14,560 17,290 11,050 Nation Carrier 3,900 9,100 13,000 7,800 Yellow Pages 3,600 9,200 9,200 5,700 Skynet U Ltd 5,850 33,150 47,200 15,400 Daks Courier 4,000 12,000 12,000 6,000 New Times Express 6,500 19,500 19,500 12,350 34

Broadcasting Developments in the Broadcasting Industry, June 2013 June 2011 June 2012 June 2013 54 60 68 14 10 10 3 3 1 1 2 229 250 251 48 36 35 35

Consumer Complaints Status of Consumer complaints through UCC, April June 2013 RECIEVED RESOLVED PENDING Number 14 12 10 8 6 4 2 VALUE ADDED SERVICES UNSOLICITED MESSAGES UNSOLICITED OPERATOR CALLS DATA/INTERNET RELATED Types of complaint BILLING MOBILE MONEY SIM REGISTRATION AIRTIME LOADING AIRTIME LOADING OTHERS BROADCASTING 36

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