Nana Yaa Ofori-Atta writes...Stoking the embers

Nana Yaa Ofori-Atta writes...Stoking the embers
Source: Ghana| Nana Yaa Ofori-Atta
Date: 04-06-2018 Time: 05:06:07:pm
The writer of the article, Nana Yaa Ofori-Atta

Taking Cover

On June 11, 2018, all telecom operators are required to connect their operations to a Common Platform that should, according to the Ministry of Communications, enable real-time monitoring of the volumes of their traffic and thus the taxes they are required to pay and help to detect sim box and other frauds.

The Minister, Mrs Ursula Owusu-Ekuful, has told Parliament that a five-year contract worth $89 million is to be operated by GVG, a Haitian company, in a joint venture with a local company.

The Minority in Parliament has echoed voices in civil society including from Imani Ghana, a think tank, demanding further and better particulars of the contract and its implications. Fresh from the scandal of Cambridge Analytica and Facebook, the prospect of unauthorised data mining resonates with many as sim box fraud, security breaches and potential revenue losses exercises the minds of others.

The reason why they are in the Minority is that the National Democratic Congress has handicaps.  In this matter, they are shortchanged, again, by their history.  Having summoned Minister Owusu-Ekuful to the House she stuck to her barbed guns and clapped back.  She pointed out that it was during their tenure in government, that 2 companies were ostensibly paid to provide the same monitoring service.  Further, she said that the 2 shadow boxers did not deliver in real time and actually required the NCA to do the work for them.   Both contracts have been terminated and at least one of them is subject to litigation.  The Parliamentary ‘debate’ resulted in precious little further insight.

In this lumbering and lurching matter, neither MTN Ghana nor any of the telecommunication companies have directly intervened.  Instead, they have all retreated in public, taking united cover behind the Chamber. Per a publicly issued statement, the Chamber insists that its members are law-abiding, not averse to being monitored but are deeply concerned that the current architecture of the proposed monitoring system could potentially breach individual privacy and data protection rules.

The embers are well stoked and being fanned, on all networks.  MTN Ghana’s IPO coincides with an IPS (Initial Public Fracas) on matters of governance in the Communications industry.  Neither will go away, quietly. As Uganda imposes a daily levy on the use of social media platforms including WhatsApp, Viber and Twitter, across the continent, to the West, MTM Ghana has announced an Initial Public Offering (IPO) offering 35% of its ownership to willing investors via the Ghana Stock Exchange (GSE). The transaction is expected to raise Ghc3.47 billion, equivalent to $750 million, assuming an exchange rate of Ghc 4.6 – $1, (the current interbank rate is Ghc 4.4 – $1).

Headquartered in South Africa, MTN is amongst the largest operating telcos in Africa and the Middle East. The Group is active in 22 markets and lays claim to some 217 million subscribers, overall. The Group speaks to 69 million active data users, 12 million of which are in Ghana.

Typically, where they play, MTN features in the top 5 position. They remain the market leader in 14 countries, including Ghana.  Here, they boast of more than 17 million subscribers.

Talk is Not cheap

The National Communications Authority (NCA) is the industry regulator.  In Ghana, a market of 26 million people, by 2016, the NCA, reported that on the back of the availability of cheap smartphones and determined expansion by telecommunication companies, mobile subscriber base was recorded at over 35 million, mobile phone density had risen to 127.63%.

That there are more subscriptions than the population, is easily explained.  Like a number of people who are habitually shopping around for a better service at a better price, I too have multiple mobile numbers from different companies and at least 2 broadband service providers.

I also agree with an industry analyst who points out that like the banking sector where further mergers and/or departures are expected imminently, in matters telecoms, less should provide more real quality and service.

Boots on the Ground

The telecommunications companies in Ghana comprise MTN, Vodafone, the recently consolidated AirtelTigo, the barely composed Glo as well as the withering Expresso. They essentially offer 3 services: voice; data; and the very lucrative mobile money niche.  

In each of these 3 categories, MTN is a clear leader.  In voice, it controls 47.6% of the Voice market; 56.5% of mobile data; and in mobile money, a resounding 93.9% is theirs for the plucking.

Actually, over the last 5 years, an industry analyst said that MTN Ghana has accounted for 3% of total tax revenue.  Very weighty boots on the ground.

Pure bottom line aside, mobile phone access speaks also to the challenges and opportunities of social progress.  A 2017 report collectively launched by the Ghana Chamber of Telecommunications (Chamber), the United Nations Development Program and the UK’s Department for International Development, on advancing the mobile digital footprint to deliver on development goals makes for interesting reading.

It estimated then, that 67% of the population has access to mobile phones, almost half of Ghanaians can access mobile internet and in the sub-region, Ghana has the second largest mobile coverage.  The Government of Ghana will be looking closely at how the 4.36 billion shares MTN Ghana is offering fares – it is the largest IPO in the history of the stock exchange – and what additional social dividends it can realise from this, in their new mission of Ghana Beyond Aid.

Taking Position

Technically, the MTN IPO is not news, per se.  It is a condition in the small print of their ascension to a 4G license.  That little matter cost the company an estimated $67 million, this is aside from the bill to roll out, build switches and various sites.  As of September 2017, the NCA reported that only MTN and 3 local companies, Blu Ghana, Broadband Home and Surfline have been able to afford and operate the 4G license.  Again, MTN was the market leader in the growing 4G space.

The facts behind the figures are that the GSE has 34 listed companies with market capitalisation as of May 31st recorded at Ghc63.6 billion ($14.4 billion). The entrance of MTN Ghana will inject much breathing room.

The questions to be asked include:  By the end of 2018, Ghana will likely, finally move its radio stations up and away from the 700 megahertz band and free up more space for other 4G licenses? Will there be any takers with/out local content for new 4G licenses when these become available? Will the license fees be rationalised lower?  Over the last 5 years, MTN Ghana has repatriated more than 55% of its profits to its shareholder, Group.  What impact if any, will the IPO and impending Ghanaian retail ownership of 35% have on stabilising currency fluctuations in Ghana?

Talk is Not cheap

The National Communications Authority (NCA) is the industry regulator.  In Ghana, a market of 26 million people, by 2016, the NCA, reported that on the back of the availability of cheap smart phonesand determined expansion by telecommunication companies, mobile subscriber base was recorded at over 35 million, mobile phone density had risen to 127.63%.

That there are more subscriptions than the population, is easily explained.  Like a number of people who are habitually shopping around for a better service at a better price, I too have multiple mobile numbers from different companies and at least 2 broadband service providers.

 

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