For the First Time, MTN Rwanda is Hearing Footsteps

It all began in 2011 with a court verdict ordering for Rwandatel’s assets to be put up for sale, placing the pioneer of 3G in Rwanda under liquidation. Little did MTN Rwanda know, seven years later, that it would be hearing loud footsteps for the first time — from an unprecedented, powerful and super rich rival.

The coup de grâce that hit Rwandatel lurked in the shadow of the embattled telecom a few weeks earlier when RURA (Rwanda Utilities Regulatory Agency) revoked its operating license over “failure to meet telecommunications standards”, announcing that the firm’s mobile service would be switched off a week later. François-Régis Gatarayiha, RURA’s then acting director-general, advised Rwandatel’s customers to subscribe to alternative networks — namely MTN Rwanda and Tigo Rwanda.

In the halls of MTN, executives found this to be a big opportunity to lure thousands of disoriented customers, spilled over in the air by the liquidation, into their network. The executives were also convinced that MTN Rwanda had a large and “loyal” number of post-paid and corporate customers who consumed the telecom’s services lavishly — something that Tigo would later attempt to no avail until it bowed down and abandoned the idea once and for all.

For a firm that enjoyed monopoly for 10 years, MTN benefited from this time to build its infrastructure and deploy it on every hill of the country, making it extremely difficult for eventual entrants to survive.

India’s Bharti Airtel — shook the lucrative telecom market later in 2011, bringing with it a technology that’s modern and far superior than that of MTN Rwanda. While MTN relied on Chinese Huawei and ZTE to deploy 2G and 3G in the country, Airtel signed a contract with Ericsson. It’s not only that: the Swedish firm, renowned across the globe for world-class mobile network infrastructure, provided Airtel with their latest software, hardware and continued technical support.

According to Wikipedia, Ericsson had 35% market share in the 2G/3G/4G mobile network infrastructure market in 2012.

In April 2012, Airtel acquired Rwandatel’s masts for $15.5 million and this facilitated the telecom to dive into the country by bringing stable network across the capital city. In a bus that traveled around Kigali, I was among the few that Airtel invited to test their acclaimed network — and I was mesmerized by how the signal remained constantly stable. At the time, you couldn’t do that with MTN because the signal would toggle between 3G and 2G, sometimes dropping completely.

Equipped with powerful towers, Airtel later deployed 3G in all major towns of the countryside, leaving MTN behind in Kigali.

But despite all the might in technology, Airtel was grappled, if not horrified, by how it couldn’t lure subscribers into its network. To the disgruntled executives, this was unimaginable. While MTN and Tigo each had millions of subscribers, Airtel struggled to register a few thousands, prompting Bharti Airtel to replacing its subsidiary’s managing directors in Rwanda nearly every year. You can imagine the atmosphere that reigned in teleconferences between Kigali and New Delhi.

When Korea Telecom brought 4G (LTE) to Rwanda, the status quo unfortunately remained the same for Airtel where demoralised technicians in the LTE department gradually started going elsewhere, one by one.

Part of Airtel’s failure can be explained in the reluctance of customers to embrace a third telecom — in Rwanda, this unfortunately still means registering a new number. The ubiquity of cheap Chinese dual-SIM feature phones played an important role in this, for it didn’t really matter for people to own two SIM cards as long as they walk with a single handset, whereas a third line meant purchasing another phone, thus colliding with one’s frugal plans. There are also others who regarded a third line as simply “superfluous”.

I on the other hand blame RURA. Had the regulator stuck to its commitment of opening number portability — the freedom of switching networks while keeping one’s number — once mobile penetration rate reached 60%, Airtel wouldn’t have passed through that nightmare. The penetration rate is now at 75.5% and still nothing seems to be on the horizon, but we shouldn’t forget that it was at 41.8% by the time Airtel entered Rwanda.

MTN kept on reaping millions of dollars each month, throwing breadcrumbs to starving Airtel. To most Rwandans, none of the two “small” players — Tigo and Airtel — would ever think of bumping heads with the South African telecom giant again.

But for Bharti Airtel, the largest mobile network operator in India and the third largest in the world with over 386 million subscribers, exiting Rwanda (and Africa) was incontestable. In one of the most audacious endeavors in the history of telecom on the continent, a blockbuster plan died at the last minute in 2008 when the Indian mammoth came a few inches closer to acquiring South African MTN Group for $45 billion.

An inter-continental telecom that invests $1 billion annually in Africa, Bharti Airtel instead opted to sweeping competitors off its way by swallowing potential but wobbly ones. Across the border, it acquired Warid Telecom Uganda for $100 million in 2013, bringing it head to head with MTN Uganda. The move happened as well in Ghana in October 2017 when Airtel merged with Tigo Ghana, effectively becoming the second largest telecom behind MTN in the two respective markets; and very recently in December 2017 when it acquired Tigo Rwanda for $1 billion, where combined subscribers from this tactical move made Airtel the leading telecom in the thousand hills, dethroning MTN.

This whirlwind, put in motion a long time ago, will never come to a halt until executives in New Delhi put the remote back in its drawer.

For the first time in its history, it’s the entire MTN Group that’s hearing footsteps.

Whether MTN Group was elicited by Bharti Airtel’s moves or not, what it is certain is that the former spent $20 million to upgrade and modernize its subsidiary’s outdated infrastructure in Rwanda. The rollout started last year and it resulted in network disruptions, forcing MTN Rwanda’s CEO Bart Hofker to convene a press conference in January 2018 to assure customers that the best is yet to come — which is true — and to paint them a clear picture of what’s really happening behind the scenes.

Today at the press conference I explained that @MTNRwanda is investing heavily in the network and is currently in the midst of modernizing the entire network. At the same time, the demands on our network are increasing exponentially… 1/3

— Bart Hofker (@BartHofker) January 12, 2018

..The @MTNRwanda network revamp is a complex process but a necessary step to become future-proof for Rwanda. While building the new network, December showed unprecedented record peaks in voice and data usage. We regret this created issues with network stability for customers 2/3

— Bart Hofker (@BartHofker) January 12, 2018

…The good news is that the worst is over and customers will experience gradual improvements from now on. @MTNRwanda has committed to communicate weekly about the network progress. The whole operation will be finalized mid-2018. 3/3

— Bart Hofker (@BartHofker) January 12, 2018

What he didn’t disclose, however, is what’s important: MTN Rwanda partnered with Ericsson — the same Swedish firm that turned Airtel into an internet powerhouse in Rwanda — to provide the telecom with state-of-the-art equipment that was manufactured in 2017.

MTN Rwanda is also killing 2G (or Edge) — that literally useless internet connection — or making it almost non-existent once the network revamp is complete (expectedly in May 2018). Regardless of where you will be in the country, MTN Rwanda’s tower transmissions will emit improved 3G.

Ever since Rwandans were introduced to mobile telecommunication in 1998, this is the best time to enjoy the fruits of competition. It’s time for MTN Rwanda and Airtel Rwanda to lock horns for the benefit of the customers. It’s also a good time for RURA to reconsider opening mobile number portability to facilitate possible telecoms that might wish to join the market.

This article was originally published on the author’s blog.

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