MTN’s reign in Africa is about to take a hit as Ghana plans to downsize the influence of the telecom giant in the country.
Ghana’s telecom regulator, the National Communication Authority said it is working on “specific policies” that will minimize the dominant influence of MTN. The South African company has become the largest network in Africa dominating almost in every country of its operation. Ghana’s Communication Authority said the move is necessary in order to facilitate a level playing ground for telcos in the country after classifying MTN as “dominant market power.”
“The National Communications Authority (NCA) in the exercise of its mandate under Section 20 (13) of the Electronic Communications Act, 2008, (Act 775) hereby declares its intention to classify MTN as a Dominant/Significant Market Power,” the NCA said.
MTN’s dominance became notable in 2018 after its initial public offering recorded 84.6% of local buyers who used the telco’s mobile Momo Wallet. The IPO took Ghana’s stock market by storm to become the largest ever traded in history of the market. Thousands of Ghanaians purchased shares using their Momo wallet accounts to raise $237 million for MTN.
Ghana is pushing for financial inclusion and sees MTN’s rapid growth as a threat that needs to be curtailed if other players will have a shot. In March, MTN dominated in both voice and data services, leaving its closest competitors, Vodafone and AirtelTigo two places behind.
Banks are other players in the country’s financial sector at risk of being dominated by MTN’s mobile money services. It appears that the Bank of Ghana and the NCA are concerned that the push for wider financial inclusion will be monopolized by MTN if nothing is done to reduce its growth.
Quartz reported Kenya’s similar situation where Safaricom was exerting such dominance using M-pesa mobile money service. But the government didn’t see a reason to regulate the market to curtail Safaricom’s dominance, and that resulted in the merger of Airtel and Telkom, Kenya’s second and third largest mobile phone operators. The combined efforts were aimed at disrupting the growing dominance of Safaricom and putting up resistance to monopoly.
M-pesa has the highest number of users in Kenya and it is estimated that about 50% of the country’s GDP go through the platform. It appears to be a typical situation that Ghana is trying to avoid.
Another downside of such dominance in African telecom industry is lack of competition that in turn results in high cost of call and data. Alliance for Affordable Internet (A4AI) said that Africa is paying too much for the internet, and it will take $100 billion in mostly infrastructure-based spending to bring the cost down.
One other problem that A4AI noted is lack of competition in African telecom markets. It estimated that in countries where there is lack of competition, mobile phone users pay $3.40 more per gigabyte data.
Ghana is gearing up to implement policies that will reduce MTN’s dominance. The regulator said it will be setting call, data, text message and mobile money prices to give other operators a fair advantage.
“The National Communications Authority will in the coming days begin the implementation of specific policies to ensure a level-playing field for all network operators within the telecommunications industry,” the NCA said last week.
Meanwhile, telecom tower company Helios Towers Ltd is planning a $450 million expansion deal in Africa. This is part of the $1 billion it raised last week from the debt market. The company is making Ethiopia its immediate target as the East African country has two operating licenses to auction.
The Chief Financial Officer of Helios, Tom Greenwood said there is a big opportunity in Ethiopia, but the company will need as many as 10,000 new towers to support its expansion into Africa in the next five years.
“Ethiopia is a very big opportunity, and after a few months of being quiet its government has requested new indications of interest from telecom operators. With that now back on the table, we are seeking a financing partner and working with mobile operators to be in a strong position to enter the market,” Greenwood said.
Helios is also considering nine other African countries including Egypt, Morocco and Madagascar, which is among the reasons it is seeking partnership with mobile operators for a strong position.