Africa's largest mobile operator, MTN, has increased its stake in Rwandacell to 80 percent in a bid to consolidate its operations after the Rwandan government awarded rival operator Airtel an operating license.
MTN and Millicom International are the two mobile operators currently operating in Rwanda, after the Rwanda Utilities Regulatory Authority (RURA) revoked Rwandatel's license in April this year due to poor service and failure to comply with license obligations.
The sale of an operating license to Airtel, and its expected takeover of Rwandatel, has sparked MTN's appetite to consolidate its operations before Airtel launches its network to counter its influence.
Only five months after RURA awarded a license to Airtel, MTN announced it was increasing its stake in the company in order to boost the company's operation. MTN has bought additional 25 percent stake in Rwandacell from Crystal Ventures, a leading private investment company in Rwanda, which owned 45 percent shares in the company.
Crystal Ventures will retain a 20 percent stake in MTN Rwanda and will remain an active minority shareholder in the company.
MTN president and CEO Sifiso Dabengwa said in a statement last week that the, "increased investment in MTN Rwanda demonstrates the company's strong commitment to Rwanda and the broader East African region."
Rwanda has the fastest growing telecom sector in Africa, with several telecom investments being made in the telecom sector by the Rwandan government the World Bank.
Airtel, Africa's second largest telecom operator, is moving into Rwanda after getting a $30 million license last month to operate a GSM and 3G license. The license that Airtel took over was until April this year a property of Rwandatel, which was controlled by LAP Green Networks, a telecom investment vehicle for Libya Africa Investment Portfolio.
Airtel has already pledged to invest in the Rwandan operation over the next three years in network expansion and infrastructure development.
Rwandatel is under liquidation and the Rwandan government is expected to ask Airtel to take over Rwandatel's assets, currently valued at $50 million.
The Rwandan government claims its objective is to grow and develop the telecom sector to international standards.
MTN has dominated the Rwandan telecom market since Rwandatel lost the license but the investment of Airtel in Rwanda is expected to heat up the competition in the country that currently has 3.9 million.
"The resulting competition will definitely force the three operators to expand their networks to rural areas where mobile communication is almost unavailable. That in fact is what the Rwanda government wants," said Amos Kalunga, a telecom analyst at computer Society of Zambia.
The competition is expected to lower the already falling call rates in the East African country.
Latest statistics from Rwanda Utilities Regulatory Authority (RURA), the country's telecom sector regulator indicate that the country's mobile penetration has reached 38.4 percent.