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Opinions of Tuesday, 20 January 2009

Columnist: GNA

Telecom in Ghana - A Game of Multinationals

A GNA Feature by Samuel Dowuona

Accra, Jan. 20 GNA - It is now official that all the operators in the mobile telecom industry in Ghana, particularly the GSM service providers, are multi-nationals.

MTN, TIGO, ZAIN, GLO, KASAPA and GT/VODAFONE as they are ordinarily referred to, are all either wholly or largely owned by foreign multi-national telecom companies.

The simple history of their coming into Ghana is that of either complete buy outs of local interest or foreign-local partnership, where the foreign investor holds the majority shares Investcom bought 98 per cent of Scancom and changed Areeba to MTN - Everywhere you go; Zain bought Western Telesystems Limited (WESTEL) and changed the brand name Westel to Zain - A wonderful world; Millicom International Cellular S. A. re-branded Mobitel/Buzz to Tigo- Express yourself and Kasapa re-branded Celtel Ghana into Kasapa - The power of 028.

Globacom - Rule your world, obtained a direct licence from the National Communication Authority (NCA) and most recently Vodafone bought 70 per cent shares in Ghana Telecom, but still uses the "linking people everywhere" slogan for the network and "proud to be Ghanaian" and "stay in touch" for the GSM service, Onetouch.

Scramble For Clients

Projections by industry analysts indicate that within the next year or two, the six operators would have a little over two million potential subscribers to compete for.

Even though some industry analysts are sceptical about the invasion of as many as six huge multi-nationals into a relatively small Ghanaian market, the fact remains that the competition is significant because not only would it put all the players on their toes to deliver, but it also promises to bring to the Ghanaian economy the best in telecom innovation with its attendant direct benefits to the people in terms of quality services and tariff cuts.

It would also provide a support base for the speedy realization of country's Information Communication Technology for Accelerated Development (ICT4AD) Policy agenda.

For one, each of the players is busy digging wherever they could obtain legal permit to and laying their own fibre optics cables and installing other modern infrastructure to ensure that they are up to the game and the demands of the time.

Fibre optics in simple terms is a sort of glasslike cable technology that transmits voice and data messages faster than the normal wire cable.

Interestingly, whiles the competition promises to be keener in the near future, competitors are also entering into co-location deals to allow each other to serve their subscribers using each other's cell sites (masts).

Co-location allows several telecom companies to locate their transmitters on the mast of one operator in particular areas, to prevent the situation where several operators mount masts within short intervals and create an untidy scene.

At least four industry-related bills are before Parliament, all ultimately intended to re-orient the regulator, National Communications Authority (NCA) and to revamp the regulation system to ensure that it is upbeat with modern trends in the industry.

There is the NCA Bill itself, Electronic Communication Bill, Electronic Transaction Bill and the Information Technology Agency Bill, each of which are yet to be passed into law.

But whiles the industry is awaiting the revamp of the regulatory system and re-orientation of the regulator, the game is on and it is being keenly contested.

Tale of the Figures

It has become necessary at this time to compactly profile the players in the industry and closely look at what they bring to the market in terms of network infrastructure, services and products, social responsibility and engagements with the community, what prospects they have and how they compare with each other. The point of reference is the market leader, MTN.

Data from the NCA ending August 2008, indicated that out of a total of 10,242,916 mobile phone subscribers in the country, MTN has 5,539,065, representing 52 per cent of the market; Tigo following half way with 2,668,316 subscribers; followed by GT/Vodafone with 1,648,544 subscribers; whiles Kasapa trails far behind with a meager 386,991 subscribers.

Glo and Zain are yet to record any GSM mobile subscribers in the country, but Glo made it quite clear at their launch that they would attract at least two million subscribers in their first year. Meanwhile Zain has actually rolled out an ambitious strategy to capture 150 million subscribers around the globe. One can only imagine what that means for its operations in Ghana.

In terms of their international strengths, the MTN Group has 74.1 million subscribers across 21 countries in Africa and the Middle East, and remains the market leader in some of the countries where Zain and Vodafone are also players. But MTN's strength compares unfavourably with that of Vodafone in generic terms.

Vodafone is way ahead of MTN in the league, with 269 million subscribers (June 2008) worldwide, employing some 72,000 professional staff. Fact is that Vodafone is a world telecom leader. In South Africa where MTN is headquartered, Vodafone, through its subsidiary, Vodacom/Telkom South Africa is the market leader with 54 per cent of the mobile phone subscribers, whiles MTN trails with 36 per cent.

Besides, Vodafone also has a commanding presence in parts of Africa with majority shares (40 per cent) in Safaricom, Kenya, which commands over 80 per cent of the mobile phone market in that country and also has 54.1 per cent in Vodafone Egypt.

Zain boasts of some 50.74 million subscribers (June 2008) in 22 countries mainly in Africa and Middle-East and has a staff strength of 16,000 across its operations. Glo has 13 million subscribers in Nigeria, where it is headquartered and is on record as the fastest growing telecom company in that country.

With operations in 16 countries in Africa, Asia and Latin America, Tigo recorded some 23.4 million subscribers in 2007. Kasapa's international strength is not readily available.

Infrastructure Base

In terms of Infrastructure, MTN Ghana inherited a little over 500 Base Transmitter Stations (BTS) spread over 300 cell sites from the former operator. In less than two years it had added on more than a 1,200 BTS and 1,000 cell sites.

In addition to the cell sites, MTN has so far installed 462 km of fibre optics cable in parts of the country and is still laying more, because of which the Corporate Service Director, Mawuena Adzo Dumor has said that MTN would double investment for network infrastructure over the next few months.

Vodafone inherited the Enlarged GT Group, comprising of fixed networks (landlines and data), SAT-3, One Touch (GSM mobile service), exZeed call centre services, Volta River Authority Fibre Optic Network (Voltacom) and the Ministry of Communications' National Fibre Optic Backbone.

Recent media reports indicate that 50 since Vodafone came into the country; they have already made significant improvement in network infrastructures across country. The new CEO of GT/Vodafone, David Venn has stated clearly that whereas all the players could acquire expensive technology, the difference among them would be quality and choices of services they offered subscribers.

Zain, Tigo, Glo and tiny-winy Kasapa are also vigorously laying their own fibre optics. But figures on those are not readily available. Like Vodafone, Zain and Glo are already in competition against MTN in other jurisdictions and Zain in particular is reported in the international media as being a torn in the flesh of MTN, especially in the Eastern African market, where MTN, Vodafone and other operators are reported to have ganged up to leverage their strengths against Zain. Indeed industry analysts have predicted that with the global experience and financial muscles that operators like Vodafone and Zain bring to Ghana, they could rock the comfort zone of MTN in a few years. Vodafone for instance has promised to colour the country red in a few months, arguably to stamp out the "yellowfication" of the country by MTN a year ago when they re-branded.

In more definite terms, the new CEO of GT/Vodafone, David Venn has stated strongly that "Vodafone is here to change the market" and that "when our competitors see what we are doing they will step up". The Vodafone CEO also stated clearly that corporate social responsibility was tops on his list. Indeed ahead of his coming, the Vodafone Foundation sponsored six charities to Africa, including Ghana. Zain are already sponsoring social event including the biggest outdoor social event in Ghana ever, the Joy FM Schools Re-union. One can only imagine what they have up their purple, black and green sleeves. The 026 Experience, another massive outdoor musical concert is one of the exciting things up the sleeves of Zain.

Glo has not started operations either but they are already title sponsors for Ghana's Premier League. Through that they have managed to imprint the glo vegetation green in the minds of Ghanaians. Glo has not hidden their intentions to live up to their name (Globacom) by reaching as far as the US and UK markets from their Nigerian base.

Indeed each of the new comers, have given hints of some of the exciting services and experiences Ghanaians would witness with their coming into the market.

But all those are just the social side of things. Consumers are more interested in quality service and which network offered the best of it at the most affordable rate.

Beyond all the mobile phone and data services that Ghanaians are used to, some of the players have received licences to run Third Generation (3G) service, which makes it possible for calls to be made safely from anywhere on the surface of the earth, including inside aircrafts, on the sea and lots of other places.

Mobile money transfer system, Mobile TV and other very sophisticated services at cheaper rates are on in the telecom pipelines. The other players already in the market, Tigo and Kasapa are not doing badly either, but MTN remains the market leader.

POACHING of Staff

Since the entrance of the new players, there has been serious poaching of professional staff from one player to the other. Zain seem to wield the upper hand in the poaching game, having attracted some of the top staff from the three market leaders, MTN, Tigo and GT/Vodafone since it arrived in the country.

Reliable sources at MTN and Tigo confirmed to this writer that most of the desks in their technical sections are empty, because the staff members have been poached by Zain. Meanwhile MTN has also been poaching staff from Kasapa and GT/Vodafone.

It is like a sweet bitter experience, or better yet "paying some of the players in their own coin".

All of the new entrants are reportedly hoping for the speedy implementation of the number portability system that would allow subscribers of one network to cross over to another network but maintain their original phone numbers with the exception of the network code that will change.

The number portability system promises to present an opportunity for new entrants to legally "poach" some of the subscribers of the existing network using very enticing products and services.

The regulator, NCA is seriously working on giving approval to number portability system, which will for instance allow a phone number like 020-8163947 to be transferred to another network with code 029 and therefore become 029-8163947.

Industry analysts have said that the system presents an obvious threat to the players already in the market, particularly the market leader, MTN.

But the strength of MTN does not only lie in its network infrastructure and number of subscribers, but probably more in its innovative products and services as well as its strategic social engagements with the Ghanaian community.

MTN was the title Sponsor for Ghana 2008 tournament, Ghana Music Award, Metro TV Sport Academy reality TV show, Project Fame (Africa), Stars of the Future, and major sponsor of the Ghana Black stars and many other laudable causes in country.

Additionally, through the MTN Foundation, the company is committing one per cent of its pre-tax profits to the development of education and health infrastructure to benefit mostly the deprived communities in the country.

That is all beside the fact that in 2007 alone, MTN paid more than US$50 million in corporate taxes to the government and contributed an additional US$20 million to the water sectors. But the question is whether all that is enough to keep MTN at the top for the rest of their stay in Ghana in the face of all these global players invading the market.

Whether MTN remains at the top, or Vodafone takes over, or Zain's ACE strategy succeed or Glo actually rules the Ghanaian telecom world or probably more people decide to express themselves on Tigo or the power of Kasapa's 028 proves reliable enough to attract majority of subscribers, it is the Ghanaian subscriber that ultimately benefits from this game of multi-nationals.