The announcement by MTN to double its call rates from 2 Uganda Shillings per second to 4 Uganda Shillings per second is the first such rise since Warid Telecom entered the Ugandan market and Airtel took over Celtel/Zain last year. Telecom operators since then kept lowering call charges, and while MTN with 2 Shillings per second was the most expensive other operators went as low as 1 Shilling per second to break into the market and harvest market share.
MTN was citing inflationary pressures when making the announcement, a development certainly not welcomed by government as it will impact on the September inflation figures without doubt.
On a different level Airtel and MTN are also taking on the now government majority owned UTL the Ugandan government had taken over the Libyan shares of about 69 percent when the UN mandated sanctions against the Gadaffi regime with mega claims on interconnection charges being pursued in both commercial court and the public arena. Here Airtel followed earlier proclamations by MTN to cut off calls from and to UTL numbers, putting pressure on government to step in and settle. Accumulated claims from both major rivals of UTL sum up to over 25 billion Uganda Shillings while the media owners association has also barred UTL from advertising in the local media due to non-settlement of allegedly huge claims.
The crisis was made worse when it was learned that Gadaffis regime had failed to inject promised capital into the company, leading to the failure to pay outstanding debt, while senior staff were also quietly leaving the sinking ship as one contact formerly with UTL put it to this correspondent.
Whichever way UTL will go is now more likely than before a decision the Ugandan government, holding much of the shares at present both directly and indirectly will have to decide, but it cannot be in the public interest to let the company go under. Government will also watch closely if the other players, like Warid, Airtel and Orange will follow the example set by MTN to double their tariffs too, while Ugandans brace themselves for more double whammys on the economic front, having to dig yet deeper again in their already empty pockets to pay for phone calls.