Korea Telecom to spread 4G brand beyond Rwanda border - The East African

Korea Telecom to spread 4G brand beyond Rwanda border

Saturday September 10 2016

The 4G Square in Kigali. The low adoption of

The 4G Square in Kigali. The low adoption of the 4G high speed network has forced Korean Telecom to look outside the borders of the country. PHOTO | CYRIL NDEGEYA 

By Moses K Gahigi

Korea Telecom (KT), the sole wholesalers of 4G LTE in the country, is looking to expand its footprint into other African countries using Rwanda as a launch pad.

The company formerly known as Olleh Rwanda network has had a difficult time selling its flagship product 4G LTE to Rwandans with many preferring to stick with 3G Internet despite the speed edge 4G has over other products.

“We are now looking at the entire African continent; we want to use Rwanda as a launch pad into other countries,” said Han-Sung Yoon Patrick, the chief executive of KT Rwanda Networks.

The low adoption of 4G LTE was largely attributed to the fact that the product entered the Rwandan market at a high price, which quickly drew a market line, showing consumers prefer affordable Internet to high speed, a factor which has come to shape people’s perception of 4G as an expensive option, a reputation KT still struggles to change.

KT has maintained that it is the retailers who have made the product expensive through their inflated pricing to the consumers, hence the low adoption.

By February 2015, 4G LTE had only1,000 subscribers, according to data from Rwanda Utilities Regulatory Authority.

“We decided to make our wholesale prices public on our website, those who continue to think over pricing is done by us can go and find out,” said Han-Sung.

At the height of its frustrations with the slow adoption, the company has faulted government, which is a partner in KT after the two signed a 25-year agreement amounting to $260 million (Rwf187.2 billion), noting that it fulfilled some of its promises which included driving 4G LTE usage in government.

“There were some delays on the government side, we thought it would be instrumental in driving the 4G LTE adoption in one way or the other, maybe policy issues came in, we have moved slowly, we discussed with government and things are starting to improve” said Mr Han-Sung.

Regis Gatarayiha, the head of ICT department at Rwanda Development Board in a recent interview said the expectations of government to intervene in 4G adoption don’t make any sense “This is a free market, let them compete like everyone else, what do they expect government to do?” he observed.

3G competition

Although the product was received with a lot of pomp and glamour, with many calling it a testament to President Paul Kagame’s credentials as a true digital visionary, 3G still dominates the market three years down the road.

KT banked on the three telecoms operating in the market to drive 4G, much as players like Tigo and Airtel have done a good job vending it to their customers, MTN the market leader has been reluctant from the beginning since it had its own horse in the race, the 3G product to sell to its customers.

For MTN to vend 4G LTE on a large scale, it needed to roll out 4G enabled simcards on a large scale, an industry expert this paper talked to said.

MTN has just invested a lot in the 3G enabled simcards, to avoid incurring those losses, it shelved plans of large scale 4G simcard rollout, and introduced just a few, to show that its customers are not denied the high speed data option.

“3G is the bulk of our business, it is definitely the priority on our network, 4G LTE is a KT product, nevertheless we owed it to our customers to give them a high speed data option, so we went for it; its consumption has been slow, it’s just picking up especially with our high end customers” said Teta Mpyisi, the brand and sponsorship manager at MTN Rwanda.

4G is one of the data options on MTN bundles, but even when customers opt for it, the signal keeps fluctuating back to 3G, something Ms Teta attributed to the fact that 3G signal is still stronger than KT’s 4G.

“KT has put up masts in different parts of the country, but the 3G signal is still stronger that’s why it keeps going to 3G even after opting for 4G” she noted.

Policy review

In the agreement no other player is allowed to invest in 4G-enabled technologies apart from KT, which has in the past caused unease among some players who even called for policy review.

Some 4G retailers have said they almost earn nothing from some packages, considering what they put the products in the market, while others said what they charge is not very high, that it reflects the price the wholesaler sells the product to them.

At piremie inc, one of the 4G retailers, 1GB (150 mbps) is sold at Rwf2,800, at KT this is sold at Rwf2,360, while the same plan goes for Rwf2,700 at Truconnect, another retailer. 5GB(150 mbps) of 4G LTE goes Rwf14,200 at piremie inc, when they get it at Rwf12,000 on whole sale price at KT, the same is sold at Rwf13,700 by Truconnect.

A few months ago, 1GB 4G package went for Rwf4,000, and 5GB went for Rwf19,000, at ISPA for instance, the new prices are a reflection of a 30 per cent reduction initiated by the wholesaler, which is starting to make things better.

But this is still seen as expensive, compared with other options like 3G, which is also competitive in speed, 1GB 4G per day costs Rwf25,000 on a monthly plan, while MTN 3G goes for Rwf21,000.

“There is a change, we are seeing an increase in 4G LTE adoption compared with last year” said Mr Han-Sung.

The company has continued to invest across the country, with network coverage now standing at 80 per cent for this quarter, while 43 per cent of the annual target has been achieved so far. 

Tigo Rwanda recently went into a 10-year deal to wholesale IP Transit service for KT Rwanda Networks, which will allow Internet international traffic from KT Rwanda Networks to transit via the Tigo Rwanda/Millicom fibre optic network into the Millicom POP (Point of Presence) in London, United Kingdom.

This means an additional investment by KT, intended to enhance the 4G LTE experience, we are yet to see if these investments will not further make the product more expensive in the long run.