Ghana: Six-way telecoms fight

The arrival of a sixth operator in the already competitive Ghanaian mobile telecoms market spells good news for customers keen to take advantage of aggressive pricing policies and product innovation.

In recent years, Ghana’s telecoms sector has benefitted from the country’s buoyant economy, which helped lead to a rise in mobile phone take-up. However, with competition intensifying in what is only a medium-sized market, companies are finding themselves battling to deliver lower prices while keeping revenue flowing.

Glo Mobile Ghana, the country’s newest GSM operator and which is owned by the Nigerian telecoms firm Globacom, announced in mid-September it had signed up 2m subscribers since its launch in April, giving it a notable market share of around 8%. At present, Glo is serving around 85% of the population from 1400 base stations, which it aims to increase to 2300 by the end of the year.

The company has also focused on keeping prices low, launching a new plan in September through which it charges customers GHS0.06 ($0.03) per minute for calls to any network. Tariffs drop to GHS0.02 ($0.01) for calls to a maximum of five friends or family. Other attractions in the plan include 100 Mb of free data in the evening.

However, new data suggests that increased competition, particularly Glo’s aggressive pricing policy, could now be affecting average revenue per user (ARPU), which remained reasonably steady in the three years leading up to 2012.

MTN, owned by the South African firm of the same name, reported that its ARPU fell from $7.00 in December 2011 to $6.30 in June of this year, although it still increased its overall revenue by 22% to reach GHS734m ($389m) for the first half of 2012. The company also announced in September that its subscriber numbers had reached 11m, 10 months after it hit the 10m-mark.

Estimated by the National Communications Authority to have a 46% market share at the end of June 2012 and 50.5% according to its own figures, MTN has benefitted from a move to focus on driving higher data volumes. Figures showed that revenues from its data services rose 193% in the first half of 2012.

Data services, which tend to produce higher margins for GSM operators, are playing an increasingly important role in generating revenues across the industry as prices of lower-value voice calls continue to fall and penetration of GSM services passes the 80% mark.

Adil El Youssefi, the new general manager of Tigo Ghana, told the local press in September that competition was forcing GSM players to consider a number of new measures, including increasing data services, selling innovative products and reducing costs.

“Competition is good to the extent that it brings the best out of every [telecommunications firm] in terms of product innovation, and lower prices for consumers – but sometimes too much of every good thing can be a bad thing,” he said.

A squeeze on margins may encourage greater sharing of network infrastructure, which the NCA is encouraging. “Co-location” of communication towers and other equipment would both lower capital costs for companies, which could prove important, and help improve coverage in more remote areas.

However, as competition increases, the survival of all six players in the Ghanaian mobile telecoms market may be determined by their ability to innovate and satisfy customer demand.