Telcos, regulator in talks as Uganda bans scratch cards

Uganda communications regulator and telecom companies are in discussions to decide the fate of airtime scratch cards ahead of their impending ban, which comes into effect on June 30.

The Uganda Communications Commission (UCC), in a notice in March, banned the sale of airtime through scratch cards.

The ban followed a spate of murders and kidnappings that the regulator blamed on unregistered Sim cards and open sale of airtime.

MTN chief marketing officer Olivier Prentout said on Monday they will comply with the directive to phase out the paper scratch cards by the June deadline.

MTN said they would instead be selling airtime through electronic means such as mobile money and online dealers.
“It is a directive issued by UCC to phase out scratch cards which I believe is a good thing because nobody will be littering pieces of scratch cards,” he said.

However, Mr Prentout could not provide nominal figures of the plausible gain or loss to the telecom ahead of the ban.

Earlier, he had said a number of telecoms still had scratch cards some which were in transit at the time of the ban.

He, however, said that not much would be lost by MTN given that most stock ups had arrived after the announcement of the ban.

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Open sale of airtime

Mr Prentout indicated that telecoms were still in negotiations to see how they will handle scratch cards that are still in circulation after the June 30 deadline.

“This is not completely addressed to date with the regulator [UCC]. I believe it will be phased out periodically. It is still under discussion but I presume they will give it some time to phase out,” he said.

Ms Annie Tabura, the MTN sales and distribution general manager, said electronic airtime will give agents an opportunity to expand their commission income, which unlike scratch cards is much higher.

For selling an airtime scratch card of UShs10,000 (Sh266) an agent is entitled to about UShs300 (Sh8) in commission.

In an email last week, Airtel informed agents that it was realigning commission for online airtime dealers to match mobile money and e-airtime dealers, among others.

For instance, the email indicated, the commission for distributors would drop from seven per cent to five per cent, while retailers would get four per cent down from six per cent on an airtime transaction.
Ms Faith Bugonzi, the Airtel public relations officer, Tuesday told the Daily Monitor in a phone interview that they had been encouraging dealers to sell airtime through mobile money ahead of the deadline.
“We are still talking to the regulator [UCC]. There will be several meetings to check what we still have in stock,” she said in reaction to what amount of airtime the company still had in stock.

The Monitor could not get a comment from UCC as Mr Godfrey Mutabazi, the regulator’s executive director, was held up in a meeting.

Criminal activities
In March notice banning the sale of airtime scratch cards among other mobile phone related items, UCC had argued that they were being used by criminals to terrorise Ugandans.

The ban followed the murder of Susan Magara, who had been kidnapped for almost 27 days.
UCC claimed that criminals were using a lax in the registration of Sim cards and the open selling of airtime to propagate crime.
A number of Uganda are employed as telecom agents to sell airtime across the country.

Many of them have, however, moved to selling airtime through electronic means such as mobile money.
UCC also banned the sale of Sim cards, which has since been lifted, after the regulator announced that government had secured machines that telecoms will use to identify fake national IDs used for registration..