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Business News of Thursday, 10 October 2013

Source: Al-Hajj

Ghanaians spend GHc20m daily on calls

With about 17 million people out of a total 24 million Ghanaians owning 27 million cell phones, a figure exceeding the 100 per cent penetration rate, the six telecommunication companies operating in the country earn an average daily income of about GHc20 million. A survey conducted by The Al-Hajj revealed that the 17 million people currently using about 20 million active cell phones each spend a daily average of one Ghana cedis on mobile phone calls only, amounting to GHc20 million a day.

Information available to this paper shows that, though internet subscription is on the low as compared to mobile phone subscription, data rakes in about GHc2 million daily to the operators. In all, the six mobile phone operating companies in Ghana, MTN, Vodafone, Tigo, Airtel, Glo and Expresso are reported to be earning about GHc7 billion per annum.

Ironically, all the huge sums of money accruing daily from the telecommunication industry goes to foreign companies since none of the six operating companies in the fastest growing industry is Ghanaian owned. But, whereas many think the Telecos are making huge profits, Chief Executive of the Ghana Chamber of Telecommunication, Mr.Kweku Sakyi Addo, told this paper in an interview that the cost involved in operating a mobile network in the country is high, stressing that: “what the telecom companies bring to the country is more than what they take out of the country.

Discounting the notion that network operators repatriate huge profits they make every year instead of investing part in the industry, Mr.Sakyi Addo explained that, apart from cost-sharing, the telecom companies spend nearly 37 per cent of their annual revenue on taxes, duties and royalties. For instance, a 2010 report by international research firm, Delta Partners, revealed that, telecom operators paid GHc598 million in taxes and levies, representing 10% of government income for that year. The telecom sector alone represents about 7.0% of all investments in Ghana and is responsible for 2.0% of Gross Domestic Product while the sector also takes some 5.3 per cent of the total expenditure of consumers.

Though Ghana has the 15th lowest cost for mobile communication on a list of 50 countries listed in the Nokia total cost of ownership study in 2011, operational cost of telecom operators keeps going up with each passing day whiles average revenue per user is also on the ascendency.

Against this backdrop, Mr. Sakyi Addo stated: “If you take MTN for instance; in 2012, 85 percent of their income went into cost, (Recharge Cards, salaries, overheads, taxes and royalties) with the remaining 15 percent re-invested into the industry because on a daily basis, subscription keeps increasing and competition in the industry is also getting tough, so the only way for an operator to survive is to continue investing in infrastructure to better its system,” he added.

According to him, in that same year, about GHc225 million of MTN’s total profit of GHc448 million was re-invested into the industry to expand service and to meet demand whiles half of the remainder was paid to shareholders. “So you see, MTN’s shareholders earn one quarter of what the government earn by way of taxes, royalties and what is re-invested into the industry…yes, subscription is on the increase, but cost of operation has been a major challenge to the companies; for instance, Globacom spent billions just to acquire a license…that alone tells you why Ghanaians can’t own telecom companies; ” Mobile phone subscription has been on the increase with MTN leading.

At the first quarter of this year, Its subscriber base increased from 12,039, 527 in April to 12, 289,991 May. Vodafone’s subscriber base of 5,672,287 in April increased to 5,728,091, representing 21.27 per cent of the market share. Tigo’s subscriber base also increased to 3,729,611 May 2013, but its market share decreased by 0.15 per cent. Airtel’s subscriber base, which is 12.44 per cent of the total market share represents 3,350,497 subscribers. GLO’s market share as at the end of May stood at 1,681,417, representing 6.24 per cent while Expresso’s subscriber base of 154,265 for the month of May also represents 0.57 per cent of the total market share.