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Business News of Sunday, 2 August 2015

Source: The Chronicle

Ghana still charges lowest call rates in Africa

In spite of to the current economic challenges and rising inflation on other sectors of the economy which Ghana’s mobile telecom operators rely on (light, water and rent among others) to be productive, they still charged the lowest domestic call rates in Africa. According to recent data from the Ghana Chamber of Telecommunications, the country’s telecom industry average call rate is about GHp9 per minute, which is about 2 cents per minute. While the average call rates in South Africa, Kenya, Egypt and Tanzania are more than what is being charged in Ghana.

Also, Balancing Act’s report African Telecoms and Internet Markets indicated that Ghana, Senegal, Nigeria, Sierra Leone, Benin and Liberia had the cheapest call plans, whilst Cote d’Ivoire, Niger, Burkina Faso, and Benin had the most expensive. Overall, francophone countries call plans were more expensive than those found in Anglophone countries, it stated.

Sharing his thoughts on the cheapest rates in Ghana to The Chronicle, Head of Communications and Research at the Ghana Chamber of Telecommunications, Derek Laryea said the country’s telecom industry is saturated with nine operators. These, he mentioned, are six voice/data operators – namely MTN, Vodafone, Airtel, Tigo, Glo, and Expresso for the small market.

While the licensed 4G operators are Surfline, Blu and Goldkey which is yet to commence operations in the West African country. Mr. Laryea observed early in the mobile licensing process, most countries decided to ensure competition in mobile communications by licensing at least two providers.

Since then, as additional mobile bands were identified and allocated, new mobile operators were licensed and they entered the market, increasing the level of competition in the industry. “Telcos operating in Ghana today are hit with a myriad of challenges like high inflation, forex pressures due to depreciation of the cedi, power disruptions etc but yet hardly raise their tariffs because the Telco would not want to dissatisfy their customers”

These actions in the short term excite mobile subscribers in Ghana but there are long term consequences such as low revenues for MNOs (many players fighting for a piece of the cake) which could stifle innovation and delay network expansion for Telcos in certain cases, he stressed.

However, a seasoned telecom journalist, Samuel Dowuona maintained that stiff competition is the key driver of low prices in Ghana’s telecom industry, saying: “If you raise your rates and charge realistic rates people are likely to abandon your network”. Russell Southwood and Kelly Wong who analysized telcos’ prices in West Africa in the Balancing Act’s report stated: “Prices are not set through some mystical process but broadly speaking come about by bringing two sets of understandings to bear.

They can be cost-based: an operator looks at how much it costs to deliver the service and prices its minutes accordingly”. However, no operator is an island and all of them set prices in relation to what their competitors are doing. Put simply, these are the theoretical bases for cost-based and market-based pricing.

Despite the considerable number of price promotions that operators run to attract new customers, few operators seem to have a consistently applied pricing strategy designed to achieve particular commercial goals. Some operators see themselves as low-price operators and others seek to maintain higher rates but faced with the realities of the market, prices seem to be retained or go down almost randomly.

Although an imperfect measure, there are enough variances in Average revenue per user (ARPU) between countries to lead one to suspect that operators seek to let rates stay as high as possible if there are no other downward pressures on them. The blizzard of tactical promotions often obscure the fact that there is often little price differential between operator rates, particularly in the less competitive markets.

Overall, complexity of the rates on offer makes it extremely difficult for consumers to make immediate comparisons between operators’ rates. TMT Industry Leader – Africa at Deloitte South Africa, Mark Casey in a report-The future of Telecoms in Africa “The Blueprint for the Brave” stressed: “Further subscriber growth is likely to continue being driven by lower call prices and lower overall cost of ownership for handsets, allowing penetration of lower income segments”.

Despite the challenges, the Corporate Services Executive of MTN Ghana, Mrs. Cynthia Lumor, recently told members of Journalists for Business Advocacy (JBA), an offshoot of the Ghana Journalists Association (GJA), at a day’s encounter in Accra that MTN Ghana and others would continue to provide ubiquitous telecom services for their customers in the country.

She particularly reiterated MTN’s commitment to making continued investments in the network to keep up with changes in technology and customer demand, to ensure that customers’ selection of MTN as the network of choice is consistently reinforced.