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Business News of Monday, 13 June 2016

Source: B&FT

Vodafone rules out entering 4G LTE space

Vodafone Ghana, the country’s second-largest mobile telephony service provider, has ruled out entering the 4G LTE space in the near-future -- stating that its current financial position and market dynamics do not support that investment.

Chief Executive Officer of Vodafone Ghana, Yolanda Zoleka Cuba, speaking in an interaction with the press last week in Accra said as much as the company would like to introduce a 4G network, it is incapable of doing so.

“Over the long-term for us it is imperative to have access to 4G. It will actually ensure not just fast speed but network quality to all our customers, so from that perspective we are committed to 4G. But at this stage, however, when we look at the percentage of people with 4G-enabled phones it’s still around 1 percent of the Ghanaian population,” she said.

According to the National Communications Authority’s (NCA) latest industry data, Vodafone has at least 7.86 million customers - representing close to 22 percent of the industry’s market share.

But Ms. Yolanda Cuba argued that judging by the penetration of 4G-enabled handsets in the country, it’s very difficult to make the business case work and pay US$67.5million in the market structure we have in Ghana, referring to the cost of 4G licence as bought by MTN Ghana at a spectrum auction by the NCA last year.

“If you are a market leader and you have dominance in the profit pool, not just the revenue pool, it’s much easier to say in order to protect or entrench your lead I’m willing to pay US$67.5million. If you’re not, it’s very difficult to justify that kind of investment. Do we need 4G spectrum, absolutely! But can we afford it? Unfortunately, not at this time,” she added at the interaction, which was attended by Serpil Timuray, Vodafone’s Regional CEO of Africa, Middle East and Asia-Pacific (AMAP) region.

MTN Ghana, which has close to 17 million subscribers translating into about 47 percent of the market share, has begun rolling-out its 4G LTE services in a move that is expected to cement its market position as lead telecom organisation in Ghana.

Ms. Yolanda Cuba insisted that the goal of Vodafone is to become the number-one mobile telecom organization, but it’s unable to compete with Vodafone in the 4G space.

“From a competition perspective, there are different strategies that you follow in terms of asking ‘where do I compete and how do I play, where do I choose to play?’ And where we have chosen to play at this stage is actually not competing on 4G.

“This a choice we are currently making, we are unable to play in that space. As I talk to you, it would be easy to say we are going to get 4G next year - but absolutely not. What is going to happen is that we have to restructure our balance sheets to even consider being able to afford 4G,” she said.

Gayheart Mensah, External Affairs Director at Vodafone, said the company is counting on the regulator to ensure that other telcos are not marginalised by MTN which continues to dominate the market.

“We trust in the ability and preparedness of the regulator to make sure that there’s a continuous competitive environment irrespective of the conditions we find ourselves in today.

“One of the roles of the regulator is to ensure a situation in which there’s not an overpowering presence in the market, to the extent that it virtually leads to a situation where the other telcos are narrowed into insignificance,” he added.