Failure to comply could lead to, among other measures, a penalty of up to 10 percent of annual turnover.

The biggest player in the market, MTN Uganda, with 7 million subscribers, welcomed the move, saying the effect of the directive is to introduce a price floor.

"This would appear to be consistent with similar Government action taken in the region (specifically Kenya), to control the price wars in the telecoms sector," Anthony Katamba, MTN Uganda's general manager, legal and corporate services, said in an e-mail response.

Katamba said the government is reacting to the raging price wars that are not based on any significant changes in market dynamics such as supply exceeding demand.

"In fact, a number of networks are strained because of increased traffic carried for which no revenue is earned," he said. Katamba said the price wars not only threatened the viability of most of the operators but have also negatively impacted government revenue and the long-term sustainability of the sector.