MTN, since its entry into the Ghanaian telecoms house, has continuously posted spectacular progress whereas its multinational counterparts, Vodafone and AirtelTigo appear to wrestle behind. Glo made a really gallant entry into the market, however now it’s just about non-existent, as they’ve in the reduction of on the protection and centered solely on the Ghanaian triangle of Higher Accra, Ashanti and Western areas. This focus within the three main areas of the nation and their environs, has left a variety of darkish spots throughout the nation. The Nationwide Communications Authority’s High quality of Service Stories are there to indicate. The business, nonetheless, is rising on the again of MTN’s vital progress. So, what’s driving MTN’s constant progress in Ghana’s telecoms sector?
One key rationalization to MTN’s steady progress is the character of the service suppliers’ tower co-location association. There may be recorded proof to indicate that the main tower firm – ATC Ghana, which instructions about 60% of all towers within the nation and about 85% of co-location towers, is a robust ally of MTN particularly, because of the course of by which they acquired their towers from operators. Extra particulars on this seeming monopoly and the way it’s enjoying out might be discovered within the article, ATC Ghana’s de facto SMP standing and implications for smaller operators | TechGH24.
The implication of this bond between MTN and ATC Ghana implies that any new entrant would first should cope with this sturdy bond earlier than resolving another challenges. In the meantime, it’s a regulatory requirement for brand new entrants to discover tower co-location alternatives, and solely mount their very own towers if co-location will not be possible. Extra on that can be discovered within the article Co-location tower value suffocating smaller operators | TechGH24.
In any business, when one firm is dominating its market, customers normally really feel unfairly handled by way of alternative of providers offered. Certainly, a dominant and worthwhile firm would carry on investing, and MTN retains investing closely. This equally dictates costs in the marketplace via all types of progressive packages. Smaller operators discover it tough to compete on costs as monetary strain mounts on them.
Within the telecom business, dominant firms would cost premium charges for calls to their opponents’ networks with cheaper charges for on-net calls. It is a technique to discourage their very own subscribers from calling different networks, and to rake in additional revenue from on-net calls. Dominant firms are additionally more likely to discover any cause to keep away from sharing their infrastructure or facilitating entry to it, particularly to their opponents. A typical instance of that is the skewed co-location association that favors MTN greater than another telecommunication firm, primarily based on lease-back contracts. This case is normally to the benefit of the dominant participant somewhat than that of shoppers, who’re left with just about no alternative.
Ministry of Communications Declares MTN SMP
A few years in the past, European and US regulators ensured truthful competitors within the telecom business by facilitating infrastructure sharing and making certain seamless cross-connect communications at a good value to telecom operators and prospects. Ghana’s Ministry of Communication and Digitalization, with customers’ curiosity in thoughts, declared MTN a Important Market Participant (SMP) in June 2020. With market shares on voice, information, cellular cash estimated above 75%, this was a much-needed name as the remainder of the business was actually and financially suffocating, working at big losses and unable to take a position.
Unsurprisingly, MTN took the federal government company’s declaration and its accompanying laws and restrictions to courtroom because the monetary affect the declaration had on the corporate was seen as vital. Nonetheless, the mandatory regulatory interventions have been set in movement to compel the operator to implement measures that may permit different telecom gamers to be extra aggressive.
Regardless of these regulatory measures, MTN’s dominance and monetary efficiency doesn’t appear to have suffered from this determination in any respect. MTN, little doubt, has a stable crew and management which are navigating the regulatory interventions skilfully. However their steady progress can also be as a result of competitors will not be doing a lot to make the most of the SMP regulatory interventions to develop as anticipated.
Airtel-Tigo Merger
In 2017, three years previous to MTN being named SMP, Airtel and Tigo merged, and the promise of this merger was engaging. In a fragmented market, the place everybody, however MTN, was dropping financially, two giant gamers becoming a member of forces was, on paper, a wonderful prospect for the Ghanaian telecom business. Clients have been promised one of the best of each worlds, and at last an operator in a position to make investments and compete with the dominant participant.
The fact was, nevertheless, totally different, as each firms couldn’t agree on a standard technique and capital allocation to make the merged firm, AirtelTigo, the formidable competitor it was supposed to be.
With every get together proudly owning 50% of the merged entity, nothing might ever be agreed on, and AirtelTigo’s strategic selections have been deadlocked every time. So, on paper, the merger was nice, however execution failed. The consequence was extra losses, each monetary and by way of prospects. After coming to the realisation that they might not agree anymore, they might each afford to stroll away from Ghana, leaving their enterprise fully within the palms of the Authorities.
Vodafone
It isn’t very clear why Vodafone, wherein authorities holds 30% shares, has additionally missed on the accessible alternatives within the sector. The group is without doubt one of the largest operators on the earth, and absolutely is aware of all of the business secrets and techniques and greatest practices from all their Opcos around the globe. But, Ghana has confirmed to be a fancy marketplace for them.
A former Vodafone Ghana CEO did state in public as soon as that though authorities holds 30% of the corporate, it doesn’t contribute 30% of Vodafone’s operational value. Secondly, Vodafone appears to be positioned as an “elite” community – so whereas they’ve very lofty buyer care packages for his or her high-end prospects, the higher majority of the shoppers appear to all the time complain of poor buyer providers from Vodafone. Sooner or later, a Vodafone Ghana CEO brazenly described complaints by fastened broadband prospects as “garbage,” one thing that badly affected their buyer base.
Certainly, in more moderen occasions, Vodafone appears to have automated their complete customer support course of and have left prospects within the palms of a chatbot known as ToBi. Clients hardly get to talk with people; and ToBi has a penchant for terminating calls on prospects even when one’s points haven’t been absolutely addressed. This goes to strengthen the notion that Vodafone is elitist of their pondering, given the truth that the Ghanaian inhabitants is basically not tech savvy and never many members of the inhabitants may even navigate their manner via a chat with a bot.
Just a few months in the past, individuals posted on Fb that they’d been in a queue for months after making use of for Vodafone Fastened Broadband (FBB). The issue appeared two-folded, both there was no availability on the community or Vodafone didn’t have the wanted funding to attach these shoppers. How else would you clarify an lack of ability to shortly signal on prospects on condition that Vodafone FBB is pay as you go – its cash earned even earlier than prospects entry the service.
Once more, Vodafone boasts quite a bit about having the blueprint for cellular cash. They usually cite Kenya’s M-Pesa, which was began in March 2007 by Safaricom, a member of the Vodafone Group. In Ghana, nevertheless, Vodafone did little or no to indicate they understood what works for Ghanaians. Additionally they didn’t take dangers with investing in cellular finance in Ghana early sufficient. MTN took the chance and invested when there was inadequate returns from the business. In consequence, MTN has for a few years been the overwhelming market chief in that house as nicely, whereas Vodafone, the supposed blueprint holder, is barely now rising on the again of free cash transfers to all networks.
One other level is that Vodafone has over time centered on model campaigns and model properties to the detriment of investments and producing pleasure concerning the community structure – it’s nonetheless the largest by way of FBB. Why is the Opex funds circuitously aligned to the Capex funds? When final did prospects see a model marketing campaign concerning the community infrastructure and availability? Certainly, it’s the community that brings prospects and delivers on income. To say the least, model marketing campaign solely creates impression of what’s not, as if it’s.
Classes from Vodafone and AirtelTigo
So, what are the teachings discovered from the AirtelTigo and Vodafone wrestle in Ghana, and from the telco business, usually talking?
Firstly, giant operators might be profitable and worthwhile elsewhere, however Africa requires a differentiated strategy than Latin America, Europe, or India. Success in these jurisdictions will not be a assure of similar in Ghana or Africa.
Teams born in Africa, like MTN, are profitable on the continent, as a result of they perceive that on a big continent corresponding to Africa, a localised strategy is essential. There are lots of nuances to the continent, and even inside every nation. Take cellular cash as an example. MTN, an African born-operator, invested in it at a time when Ghanaians solely understood over-the-counter service somewhat than self-service. It had many dangers, however MTN was daring to go along with it, whereas Vodafone was touting a perfect course of however by no means took the chance.
Not like many multinational teams, African-born firms have a long-term view of the market. They’re dedicated to the continent, as a result of there’s nowhere else for them to go, and so they perceive the continent, its complexities, and challenges. They won’t stroll away in the event that they face challenges. What frustrates multinationals from exterior of Africa, doesn’t frustrate African-born operators.
Secondly, the place giant non-African teams continuously should resolve learn how to allocate capital and investments to their markets, smaller teams are in a position to appeal to and allocate capital a lot faster. They can continuously appeal to contemporary capital, international and native to assist their growth technique. That is defined by the truth that:
- Their lean construction permits them to make selections shortly,
- They take extra rational selections and deal with the necessities and
- Not like giant teams, smaller teams don’t have to decide on wherein nation to allocate capital – they’ve only some international locations to fret about, therefore they’ll commit.
It is vitally clear that in Ghana, no telecom operator, however MTN, saved investing closely over the previous years. That can also be why MTN was first with 2G, 3G and the one operator at the moment with full 4G, regardless of the excessive value of the license, whereas the opposite giant operators have stayed off resulting from the price of the 4G license.
So, whereas MTN was investing in Ghana, the opposite huge gamers have been investing in different markets whereas minimizing their dedication to Ghana. This was as a result of they might afford their losses in Ghana, as they deemed Ghana not value their effort anymore. Airtel and Tigo walked away from Ghana and different elements of Africa, whereas Etisalat did the identical in Nigeria. They will afford that.
Time for home-made options
When Ghana determined to problem 4G licenses in 2011, there was a deliberate exclusion of all multinationals, and the licenses have been reserved for under locals. Deliberate, however restricted regulatory interventions have been put in place to make sure that locals thrive and grow to be influential in the marketplace. Right now, we’ve a couple of regionally owned BWAs (Surfline, Telesol, Broadband House, Blu and BusyGhana) which have just about coiled into oblivion, struggling on the periphery of the business.
Nonetheless, there are nonetheless many cases on the earth the place smaller gamers have managed to maintain at par with bigger opponents. A superb instance might be present in the US, the place, alongside the principle operators, numerous regional gamers function within the numerous states. An analogous instance exists in Europe, the place smaller teams efficiently compete with the worldwide telecom giants.
Wanting forward
It’s time for Ghana to permit smaller teams to take over from multinationals. Ghana wants much less conceitedness and extra dedication within the telecom business. Because of arbitrages and selections made within the headquarters of huge telecom teams, Ghana has not seen the much-needed funding in its telecom sector. This business is led by know-how, for which there’s the necessity to sustain with improvements. Whereas the world is taking a look at 5G, with some even mulling over 6G already, just one operator in Ghana owns a full 4G license. We want smaller success-hungry telco operators as an alternative of complacent and conceited giant teams.
When these smaller operators knock on the doorways, authorities/regulators ought to welcome them above everybody else. They can even want to make sure that truthful competitors is in place to intentionally incentivise new entrants to deploy 4G know-how, catch-up on innovation and actively contribute to the success of cellular cash, tech entrepreneurship and appeal to extra capital into the nation. These are the true and sensible ideas of native content material, and never simply issuing licenses to native companies.
One key coverage intervention anticipated from the regulator is with reference to the tower co-location association. That’s the key driver of the SMP’s steady benefit over all different operators. There’s a want for smaller operators and new entrants to have a cheaper entry to co-location towers to allow them to truly compete.
When all that is achieved, truthful grounds will exist, and the last word beneficiary would be the shopper, who at the moment, regardless of the 4 mainstream operators, doesn’t have a lot alternative. Within the medium to long-term, this strategy would be the greatest to guard employment and create new alternatives.