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Business News of Friday, 5 February 2016

Source: Myjoyonline.com

Telcos deny cheating allegations

Telecom operators in the country have denied accusations of cheating by the sub-dealers, wholesalers and retailers of their recharge cards.

The sub-dealers, wholesalers and retailers, numbering about 50,000 are threatening to increase the prices of recharge cards by 10% from Monday February 8, 2016 because "the telcos are cheating us."

They claimed that while cost of living and of doing business was relatively manageable, the telcos gave them higher commissions, but now that cost of living and of doing business have gone the telcos are cutting down on their commissions.

Organizer for the agitated group, Edward Asafu-Adjei, who is a sub-dealer himself, told Adom News that Tigo and Airtel in particular, have announced 20% cuts on commissions without any explanation.

But the telcos have flatly debunked the accusation of cheating, with some of them saying they pay higher commissions than the five per cent industry average so they do not see why their retail partners would claim they are being cheated.

Sales Director at Tigo Ghana, Sam Adjei-Sah admitted to Adom News that they have indeed taken one pesewa off the commissions they used to give, but what is left for the dealers, sub-dealers, wholesalers and retailers to share is still above the five per cent average.


He explained that Tigo used to give eight per cent commission but now gives 7.5 per cent to the dealers, and the dealer is instructed to take 1.5 per cent and pass on six per cent to the sub-dealer and the sub-dealer is supposed to take 0.5 per cent and pass on 5.5 per cent to the retailer.

Adjei-Sah however noted that the sub-dealers take one per cent or more instead of 0.5 per cent and give the retailers between four and five per cent and that is where the problem is.

Adom News also gathered that Airtel currently gives about eight per cent commission to dealers and the dealers pass on six per cent to sub-dealers, while they pass on 5.5 per cent to wholesalers who then pass on five per cent to retailers, which is the industry average.

So Adjei-Sah believes, even at the reduced level, Tigo still gives the final retailers the highest commission on the market, even though Airtel gives a higher commission to dealers that Tigo does.

But Asafo-Adjei said "It is never true that Tigo gives retailers the highest commissions - Vodafone treats us better than all the telcos - they still give dealers up to 10 per cent, and the dealers give it to sub-dealers at eight per cent, who then give wholesalers seven per cent and the wholesalers give retailers six per cent."

Asafo-Adjei is surprised that the Tigo Sales Director dropped the wholesalers from the distribution chain, saying that the wholesalers are key because they are the ones with the motorbikes and they go round to retailers distributing cards at their own cost.

He also pointed out that MTN pays the lowest commission of 4.25 per cent to retailers, while sub-dealers and wholesalers get a meager 0.25 per cent each which is a quarter of one pesewa.

"This means as a sub-dealers, when I invest GHC100, 000, which is one billion old cedis I will get only GHC250 as profit," he said. "How can anyone survive under such harsh economic condition with this kind of commissions."

"When a retailer sells one GHC10 card he or she makes five pesewas, so they need to sell about six of the GHC10 cards before their commission can buy one sachet water at 30Gp," he further explained.

The sub-dealers noted that retailers who risk his or her life to sell on the streets, are able to sell up to GHC500 worth of cards a day, and that gives them only GHC150 commission. So for those who sell less the GHC500 they don't make much.

Asafo-Adjei also noted some retailers sometimes even get as low as three per cent commission, particularly those in the rural areas because wholesalers travel long and costly distances to get the cards to them.

Meanwhile, retailers still insist that the only way forward would be for telcos to either revert to the status quo or the retailers have no choice than to increase prices of recharge cards by 10 per cent from Monday.

The telcos are also advising their customers not to buy recharge cards at any price higher than the face value of the card.

But some Ghanaians seem to agree with the retailers that under the current harsh economic conditions, it is only fair for the card retailers to get some respite with some amount of increase in prices, but with the consent of the telcos.