By Samuel DOWUONA
The first installment of this two-part article looked at how the government has failed to show up when there is a cash call from the two telcos in which it has held golden shares since they entered the market.
He also pointed out that if the government had just come forward for these two telcos, we could have averted a situation where today, MTN had to be called an SMP just to allow measures to be implemented to fix the yawning industry gap that government and agencies either sat back and watched it happen or sometimes played an active role in making it worse.
It’s no secret how the government sold 4G spectrum for a political price of US$67.5 million in 2015, and in the process kept the very telcos in which the government has stakes completely out of business for years. It is also no secret how in 2022, two years after MTN was named SMP, the government allowed them to acquire two 4G players while other telcos had no 4G networks.
Let’s just move on to the second part:
Due to the government’s failure to protect its own interest in Vodafone and Airtel and in the process, and thus, failed to save the entire industry from monopoly, Vodafone, Airtel and Tigo left the market. Glo and Expresso just collapsed. In fact, Glo continued to hold its license for about a year after the businesses were seized. MTN has been named an SMP and steps have been taken to “protect” the other remaining telcos from the collapse.
But it doesn’t seem to be working because, again, the government hasn’t realized the reality that what these telcos need is real capital injection, and that kind of investment would require the government, which still holds 30 percent stake of Telecel Ghana (formerly Vodafone ) and 100 percent in Attica Ghana (formerly AirtelTigo), to also cough up some money for the cause.
MTN has set aside US$1 billion for investment over five years (2021 to 2025) – that is over GH2 billion annually. As recently as the 2024 semester, MTN reported investing GH¢2.8 billion. As a result, MTN has increased its data market share even further to over 80%. The other telcos still have nothing on MTN despite all the SMP measures to protect them against MTN.
Investment
Speaking of investment, Telecel entered the market in 2022 with a promise invest at least $500 million over three years. Many industry experts were skeptical about Telecel’s claim, but the Ghanaian government seems to know something the rest of us don’t, so they gave Telecel a chance. BUT, our sources in the UK have informed us that Telecel paid absolutely nothing to the Vodafone Group for the 70% stake in Vodafone Ghana. They only inherited the assets and huge liabilities of about US$150 million.
Indeed, when Vodafone announced plans to sell a 50 percent stake in its Spanish operations to an investor, indicated the likely sale price. But the details of the sale in Ghana are shrouded in secrecy. However, the Government of Ghana through the NCA only accepted about US$10 million from Telecel as part payment of Vodafone’s US$25 million licensing fees and gave Telecel a payment plan for the balance, without checking the truth of their claim that they expected to spend $500 million in Ghana over the next three years. Now, when we ask Telecel the money question, they deliberately steer away from numbers and speak a lot of English.
We were also informed about a year ago that a company called Hannam Investors from the UK was going to work with the Government of Ghana in a joint venture (JV) to invest some US$150 million to recapitalize AT Ghana and save jobs.
To date this promise has not materialized, probably because the potential investor is dragging their feet due to the 2024 political elections that are very close in Ghana and the investor is not sure if the ruling party will win the election, so they have to wait and see if the next government will be interested in doing business with them.
Meanwhile, we are reliably informed that the investor named in AT Ghana has a Ghanaian property developer (name withheld) as local partners. Just wait for more details on this soon.
Before Telecel jumps into the Ghanaian market with promises that it is ready to invest US$500 million in the network, the government flirts with the ideas of duopoly. The plan then was that, once the Vodafone Group exited, the government, as a 30% minority shareholder, was to add Ghana Telecom (Vodafone Ghana) to the AirtelTigo marriage and create an entity with about 40 percent market share, so that the market to have only two operators – MTN and the entity created by the other three telcos. The arrival of Telecel has upended the agenda of the duopoly.
Suggestions for the future
But I personally think that the duopoly agenda could still be one of three alternatives to save the industry from slipping into monopoly:
- The government (either NPP or NDC) can find a way to take back Ghana Telecom from Telecel and merge it with AT Ghana. then invite some recognizable Ghanaian millionaires with disposable income to partner with the government to invest in this entity and make it a viable competitor to MTN.
Speaking of local millionaires, I mentioned that the named investor for AT Ghana has a local property development as a partner. This could be a starting point. Under this agreement, we can then draft some of the local experts of international repute such as Selorm Adadevoh, Ebenezer Asante and others, who have done magic for MTN Ghana and continue to do the same for the MTN Group, to they run the show. We can make better progress than what we are doing now.
- The second alternative is that the government can float its shares in AT Ghana and Telecel Ghana to raise capital locally and from around the world to make it viable. I wonder if Ghanaians and even other investors will find the two companies viable enough to invest. But as things stand now, the government is also bringing nothing to the table.
It is very likely that, one of the reasons serious investors are turning away from both AT Ghana and Ghana Telecoms is because of this government insistence on keeping its golden shares, which brings nothing to the table.
So let’s take the two telcos public like MTN did. After all, the government owns these shares on behalf of the public. Besides, Telecel said that in five years after acquiring Vodafone Ghana, it will issue shares in all its West African operations. Clearly, there is something to be said for equity. We can try this option.
- Thirdly, we can also give some crazy incentives to some of the big players in the industry to attract them to Ghana. Players like Orange, Etisalat and others who have operations elsewhere in Africa but are not in Ghana. I personally don’t think Telecel is necessarily the kind of big boy we need to provide real competition for MTN Ghana. In Ghana it is even worse.
In fact, I am even told that Telecel does not want to hear the name AT Ghana in any merger discussions given the level of liabilities that AT Ghana is presenting. So maybe the way out is to bring in other big ticket players on the basis of some ridiculous incentives to take over both AT Ghana and Ghana Telecom (Telecel Ghana).
This will not be the first time that Ghana will heavily incentivize multinational telecoms to enter the country. All telecommunications companies that have ever operated in Ghana have been granted equipment import exemptions for more than a decade as a condition of their entry into the country. I think it’s time to go down that road again and save the industry from grinding into a monopoly.
Universal 4G/5G access
Now the government has granted a 4G/5G license to a single wholesaler as one of the ways to level the playing field in the market. I fully support it in principle. It will definitely do something for the market, but how big, we’re not sure. This is because the big game in Ghana’s telecom industry is still on 3G/3.5G and only a fraction of 4G. MTN has recently done a complete overhaul of its network to ensure it offers the best experience in the 3G/3.5G space. There is no real business case for 5G anywhere yet.
So again, as always, MTN is strategizing and investing in what matters to Ghanaians to firmly position and maintain its overwhelming lead, and by the numbers, the strategy is working. We hope that the 4G/5G wholesale license will lead to generally low operating costs for all telcos and therefore lower data prices for consumers.
But one cannot be sure to what extent it will correct the market imbalance, particularly if steps are not taken to ensure some real capital injection into the other telcos to make them more attractive to Ghanaians.
As mentioned above, in principle, I support the idea of ​​universal wholesalers in the 4G/5G space for all it’s worth. But part of me also fears that we may have just created another monster, which may not fully protect the industry lambs from the existing monster, contrary to what we envisioned.
This is where we put the elephant in the room to bed in these government golden shares in Telecel Ghana and AT Ghana.
>>>The author is an award-winning telecommunications and technology journalist. It can be reached via [email protected]. And on WhatsApp at 0204646003
