MTN Telecoms firm's sale triples in Rwanda this year

11 Jul, 2005

Greedy middlemen used to pay dirt cheap prices for Rwandan farmer Cyprian Habumuremyi's potatoes grown around this lush northern hilltop village. Then a kiosk owner bought a wireless phone and Habumuremyi's fortunes changed.
A quick call to his relatives in the capital Kigali and the 55-year-old knows what the middlemen are trying to hide - how much potatoes are selling for in urban areas.
"We have seen many trucks coming to the village for the past two days," Habumuremyi said, adding: "We assume the demand for the potatoes is high in the city and the only way I can check this is by phone."
"Before this phone came, we would have to send letters to our relatives in towns, by bus or taxi, inquiring about prices."
Rwanda's economy is recovering after being hit by the country's 1994 genocide when Hutu extremists killed 800,000 Tutsis and moderate Hutus in a spasm of violence over 100 days. The genocide destroyed most of Rwanda's roads and telecommunications infrastructure.
In March 2004, MTN Rwanda, the only mobile Telecoms Company in the tiny central African nation launched a community pay phone dubbed "tuvugane", meaning, "let's all talk". It has since penetrated deep into the countryside, transforming the lives of thousands of rural people.
MTN has more than tripled its annual sales projection, selling 1,900 phones so far this year.
"We carried a survey and found that communication needs in the rural areas were greater than those in urban areas," said MTN Rwanda sales and marketing manager Emmanuel Hategeka, adding: "That's why we introduced a community phone that would be affordable to rural folk since they do not have to buy a handset."
Manufactured by a South African company, the "Tuvugane" handset looks like a fixed line, but a small antenna attached to it picks up signals from mobile phone satellite transmitters.
The phone offers the cheapest rates for local and international calls in Rwanda, where telecommunications charges remain high compared to its neighbours. It costs 20 Rwandan francs (36 US cents) for 8 seconds of airtime, compared to 147 francs on a normal mobile phone. It has become so popular that rural dwellers now take out micro-financing loans from locally-based lenders to buy the Tuvugane payphone.
"The phone has become a money-making machine," Hategeka said. "You find that instead of someone selling tomatoes which could get rotten and make heavy losses, he invests his money in the community phone."
Dansira Uwimana agrees. She owns one of only three Tuvugane handsets in Byangabo. The 26-year-old makes on average 1,500 Rwandan francs a day from the phone - more than what she earns selling pens, pencils, sweets and bananas in her mud and wattle kiosk.
Before South African telecommunications giant MTN arrived in Rwanda seven years ago, there were only 20,000 fixed telephone lines in the country of 8.5 million people.
Today, Africa's biggest mobile phone operator has 188,000 subscribers in Rwanda and continues to expand its network coverage across the hilly country.
But MTN's days of being a monopoly player in Rwanda are numbered. Last month Terracom, a private firm, took over Rwandatel - the provider of Rwanda's fixed lines at a cost of $20 million.
Terracom started operations in the capital Kigali last year, providing broadband wireless Internet services. It is also rolling out fibre optics to major towns and villages to improve Internet access and mobile phone coverage.
The government has awarded it a licence to set up a second mobile phone network, while MTN Rwanda has been given a licence to run a fixed line network.
Many Rwandans welcome the growing competition.
"There will be better services, better customer care and reduced prices now that a new operator has come in," said trader Livingstone Kitaka.
Finance Minister Donald Kaberuka said the sale of Rwandatel to Terracom would lead to a reduction in the cost of doing business for local and foreign investors. "I believe with emerging competition, these (telecommunications) costs will have to reduce to something that investors are interested in seeing," Kaberuka told Reuters.

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