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New-Airtel-LogoThere are about seven players in Uganda’s telecommunication market including MTN, Airtel, Warid, Uganda Telecom, Orange, Smile and K2 – the latest entrant.

If a single brand image of the new entity that will emerge from Warid and Airtel is used, it will have a combined subscriber base of about 7.4 million, bringing them close to the current giant MTN’s 7.7 million as of 2012.

While MTN still controls more than 50% of the market, Warid and Airtel’s combined force can now afford the luxury and flexibility of opening a new market war as the two move neck to neck.

Bharti Airtel can also now exploit the new scale by pricing its products to enjoy volumes as opposed to selling to a few at a premium.

Mohammed Nahayan, a Warid Telecom Uganda board member, said the deal is a win-win for Warid customers, while Manoj Kohli, the chief executive of Bharti Airtel, said the agreement, which is also the first in-market acquisition in Bharti Airtel’s history, will translate into a healthier telecom sector in Uganda.

However some analysts believe the merger will benefit MTN just as much as Airtel.

“Of course there are some users who have been having both Airtel and Warid and are going to drop either. So the 7.4 million users estimate is grossly inaccurate,” said PC Tech CEO Albert Mucunguzi.

“I also believe competition is easier to beat if there are fewer players as is going to be the case since MTN and Airtel combined will command more than 85% of the market share,” he added.

Warid’s 2.8 million customers in Uganda will join Airtel’s global network that reaches out to over 269 million subscribers. Airtel will be the second-largest mobile phone firm in Uganda with a 39% market share, just behind market leader MTN(49%).