The truth behind ‘friendly competition’
They (Smiles) are welcome on the market. We are not scared of them but we shall see how they serve the clients” – Warid Telecom Head of Marketing Mr Shine George“Competition is healthy, customer is ideal and we shall fight the battle in the market” – Emmy Olaki, Communications Officer of Uganda Telecom
“It is still early but we are here to welcome them onto the stage” – Chief Executive Officer MTN Uganda Mr Themba Khumalo
The entry of Smile Communications Uganda Ltd. to the Ugandan telecommunications market in late November is far from unique. Companies, usually startups smaller than the current players, often enter (and exit) various marketplaces. (In fact, South African mobile operator Cell C just announced plans to enter the mobile broadband market after years of dormancy). However, the public response from the Ugandan competition is unusual. Could such positive reaction be attributed to the name ‘Smile’? Probably not. Typically, we think of telecom companies as habitual stalwarts who are unwilling to reduce prices and may consider disrupting competitor’s infrastructure. After all, there is a news story tied to African telecommunications sabotage published approximately every month. But it’s unlikely that the industry will end in a call to arms.
New competition is beneficial to the industry as a whole, even if prices do not immediately decrease. However, the established competition cannot be overjoyed to see their market share potentially decrease. A facade of outward excitement is standard business practice, conveying both strength and confidence. In reality, a new entrance to the marketplace causes the current players to evaluate their technology, practices, and marketing strategy. Often, new companies bring new ideas to the table which then, if considered progressive enough, are adopted by the entire industry. Such was the case with the emergence of the iPod in the personal audio market. Apple’s share started small but eventually grew to enormous proportions after the style and functionality proved useful. Look where market leaders like Creative and RCA are today. The moral of the story is that telecom operators cannot ignore new competition and might as well welcome them with open arms. It’s refreshing to see this happening in Uganda.