Termination rate removal that cost Rwandacell dearly

Business Reporter based in Nairobi, Kenya

Nation Media Group

Elimination of local mobile termination rates and rising One Network Area (ONA) interconnect charges attributed to permanent roamers in Uganda and South Sudan have pushed MTN Rwandacell Plc into losses of Rwf5.53 billion ($3.86 million) in the year ended December 31, 2024.

As a result, the Rwandan Stock Exchange-listed telco, which made a net profit of Rwf5.88 billion ($4.11 million) in the year 2023, will not be issuing dividends to its shareholders.

Audited financial statements show voice revenues fell by 17.8 percent to Rwf68.72 billion ($48.05 million) in 2024 from Rwf83.63 billion ($58.48 million) in 2023 while data revenues improved marginally by 0.2 percent to Rwf45.16 billion ($31.58 million) from Rwf45.06 billion ($31.51 million) in the same period.

“In light of the impacts on our financial performance from the regulatory and competitive environment, including the loss position reported for FY 2024, the board of directors have recommended not to declare a dividend for the year.

This will enable the business to more quickly recover profitability and re-establish a healthy financial profile,” says Mapula Bodibe, the telco’s chief executive.

The Rwanda Utilities Regulatory Authority (RURA) implemented a directive in August 2023 cutting local mobile termination rates (MTR) to zero.

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Rwandacell says cutting of the local MTR to zero has caused the company to lose incoming voice revenues thereby adversely impacting infrastructure monetisation and revenue generation.

Rwandacell’s total revenues increased by 4.9 percent to Rwf261.62 billion ($182.95 million) from Rwf249.38 billion ($174.39 million) while total service revenues increased by 4.6 percent to Rwf257.7 billion ($180.2 million) from Rwf246.46 billion ($172.34 million).

The increase in service revenues was helped by revenues from mobile money business which grew by 30.3 percent to Rwf116.69 billion ($81.6 million) from Rwf89.55 billion ($62.62 million).

Total expenses increased by 26.3 percent to Rwf168.75 billion ($118 million) from Rwf133.58 billion ($93.41 million) while net finance costs declined by 11.3 percent to Rwf38.01 billion ($26.58 million) from Rwf42.86 billion ($29.97 million).