QA with Gunter Engling

MTN Rwanda is the dominant player in the country’s mobile phone industry with other two players coming up with new products to attract new subscribers.

The new chief executive of MTN Rwanda, Gunter Engling, was on 98.7 KFM radio talk show ‘Business Talk,’ during which he discussed dynamics in the industry and whether the industry needs a fourth player to bring down tariffs.

Below are excerpts of the interview:

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In your four months stint so far as CEO, give us a sense of what you inherited at MTN in terms of subscriber base and how much money you are making?

I was actually lucky, one month after my job began, we announced a milestone of four million customers. And if we look at Rwanda today, the population is around 11 million, so that means that more than a third of the people on the street have an MTN number.

It’s also quite a big organisation — we have around 250 staff members — and our staff compliment is fairly big as well. We are lucky we are the most profitable of the telcos in the country. So, it’s actually an honour to lead a company that has such a big customer base and employee base.

Four months on the job, what are your priorities?

The first priority we have which was there before I came was the diversification of our revenues. Historically, all telcos have been primarily voice-based.

Over time, the data became more important than SMS but when you look at a telco today you need to have diversification of revenues. We are lucky in Rwanda that we have gone a fair way down that journey with mobile money.

They have become quite heavy, value added services and digital services are also quite important so the diversification of revenue is very important.

At the moment what is your major source of revenue at MTN Rwanda?

Voice is still the biggest, followed by data and then mobile financial services. Mobile financial services is the fastest growing and voice continues to be a bit of a challenge.

Looking at the market as it is today, you are three players — you have four million subscribers, Tigo Rwanda is currently at around 2.9 and Airtel 1.5 as of September 2015.

Do you think there is room for another player?

Even today when one counts those customers in Rwanda, you will probably get 8.5 million, yet we all know of the 11 million people in the country — nine million don’t have a telephone.

Probably most people in the country today have two lines at least some even three and in all honesty while we are no longer addressing new customers every day, we are each addressing the same customer twice already, I don’t think a fourth player would necessarily be profitable.

A fourth player might influence prices even further but I don’t even believe that all the three players today are profitable at all. I am lucky we are the largest so we are profitable but with the low prices we have in Rwanda, I’m not so sure that both of my main competitors are profitable and fourth player will probably be very less profitable.

But there are those who look at the current pricing as it is for phone calls for instance, and say if we had a fourth player like you rightly mentioned, we have a bit of price haul which for the end user you benefit but also push penetration.

I think the question to really ask is, are the three players pushing penetration that much deeper at the moment.

Yes, but it looks like you are a bit comfortable with the numbers that’s why you are not aggressively pushing.

Every additional customer MTN gets has to be a new customer that doesn’t have a phone yet. I think our competitors at times are probably not pushing penetration as much because they are taking an MTN user and giving them a second SIM card.

I am not convinced that a fourth player would push penetration that much, it would probably just end up with a third SIM card with the existing people. I think the real challenge was pushing penetration in Rwanda is in the rural and the deep rural areas. We still have to find the right way to get the penetration down.

The cost of handsets is still quite expensive for people in those areas the availability of electricity to charge the handsets is at times a challenge, so selling airtime and handsets in Kigali is quite easy.

What will it take to push operators like you to further down the reach to the local citizen in the rural area?

The biggest challenge is cheaper handsets. Today, and if especially you want to give the people in the deeper rural the Internet at the same time as voice, you are still at the 3G entry level of the handset around $30 and entry level smartphone might be around $50.

You have a better idea than me that if I go into the deep rural, can the people actually afford those handsets. The operator that has penetrated the deepest into those areas is MTN today.

We have the broadest deep rural coverage and we probably have the most customers in the deep rural areas anyway and we continue to push it that way.

With that kind of influence, MTN is able to do that because you’ve been on the market for 17 years. One would expect as a telecom company, first of all that was on the market as a monopoly for a long time, you would as well take this opportunity even in the face of competition to push into the rural areas.

SOURCE: THE EAST AFRICAN