Elephant in the room: Telecom industry collapsing under this NCA? – Part II

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MTN
Elephant In The Room

In Part I of this article, the point was made that for NCA to seek to explain what SMP is not meant to do, after two years of implementation, indicates that the NCA is aware of public concerns about the fate of other operators in the industry under its watch, and the fear that MTN may suffer same fate. So, their post on Twitter was meant to reassure the public that, that will not happen. This is the second part of the article, and it explains how Vodafone left the market, Glo stopped operations and the BWAs collapsed on the watch of this NCA.

Vodafone

Moving on, the second biggest player, Vodafone Ghana became very vocal and blunt in their complaints about NCA’s failure to regulate the market to ensure a level playing field and sustainability of the industry. Their concern was that NCA was more interested in fines, sale of licenses and everything revenue, but did very little to properly regulate the industry to make it viable in a holistic manner. Successive CEOs and even other executives of Vodafone Ghana did not mince words on what they thought the NCA’s failures were. In fact, it was at Vodafone that NCA was described as a revenue collector rather than a regulator.

For instance, when the time came for NCA to issue 4G licenses to telcos, they chose to go with the government’s political price of US$67.5 million minimum for a 2x10MHz slot in the 800MHz spectrum band. The entire industry, including even MTN, complained about it, but the NCA will not budge because, at the time, the focus was to raise money for the government to meet the global deadline for the implementation of a Digital Terrestrial Transmission (DTT) rollout. In the end, only MTN could afford the spectrum and the rest were just cut out of the opportunity to go 4G, giving an already dominant player another edge over its competitors. Meanwhile, the DTT implementation deadline was missed.

Years later, Vodafone managed to get into the space, but could only afford just half of what MTN had – 2x5MHz slot in the 800MHz band for US$20 million. Vodafone later managed to acquire an additional 2x5MHz slot to boost its 4G spectrum stake to 2x10MHz, but that was too late.

NCA created the Monster called MTN

NCA did its worse by allowing MTN to buy out one of the BWA license holders – Goldkey Telecom. So MTN got another US$6 million worth spectrum lot in the 2600MHz band, which gave it a further advantage over the rest of the market. Meanwhile, AirtelTigo (now AT) and Glo didn’t and still don’t have 4G networks. Now even much worse, MTN was allowed by NCA to buy spectrum from Blu Telecoms and BBH in addition to that of Goldkey.

NCA allowed all this to happen at a time when it was still sitting on a report that said MTN was already a significant market power. So, one wonders whether NCA was interested in regulating the industry for growth, or just making money off the industry. NCA is the one who created the monster called MTN in pursuit of revenue rather than prudent regulation.

Take note that no one can blame MTN or any industry player, for that matter, for pursuing strategies and resources that will put it ahead of competition. MTN and any other players will always avail themselves of what the regulator makes available or allows. It is up to the regulator to know what to allow, what not to allow, when and how and to whom.

It would be recalled that Vodafone paid a significant US$900 million for 70% of Ghana Telecom and the government of Ghana continued to hold the remaining 30%. Yet, the government never contributed anything to the capital expenditure of Vodafone Ghana, not even assisting Vodafone Ghana to acquire licenses from NCA. So, after managing to survive for a while, Vodafone has also checked out of the market and transferred it shares to Telecel in a rather interesting deal. When Telecel took over, they were confronted with a debt of about $150 million, including licensing fees that Vodafone owed to NCA. Telecel had to pay about US$10 million of that debt to NCA before they finally got approval to acquire the Vodafone shares. So, what is the 30% state shares in Vodafone worth, if government cannot pay US$10 million licensing fees?

Glo

Glo still holds its license but has stopped operations and migrated all of its 800,000 customers to AirtelTigo (now AT). NCA is not telling us anything about what happens to the Glo license, which is now redundant.

As usual, we gathered from our very highly-placed sources that Glo got that license under very questionable circumstances and wasted two years before rolling out a network. When they eventually did, they claimed to have covered over 90% of this country with towers and promised Ghanaians everything like never before: voice and data network quality like never before, entertainment like never before, goodies like never before, juicy offers like never before, and more. On the back of those promises, they started with over 1.75 million customers and put the shivers down the spine of competition.

As a new entrant, Glo was allowed by NCA to have a free ride terminating traffic on other networks without paying interconnect fees. This was to drive penetration for Glo. But soon, the market became too hot for them and they started to decline fast.

Glo changed their Ghana Head of Business (equivalent for country CEO) for at least six times within two years, but it still did not work, until last year when they migrated their customers to AT and went out of operations. Glo towers have since been falling and causing damages to people’s properties across the country. NCA is sitting by and watching all this happen without doing anything and saying a word, at least not in public.

BWA’s

Under the watch of this NCA, all of Ghana’s foremost 4G players – the BWAs – have collapsed, except the heavily distressed Telesol. Goldkey could not even take off and they had to sell to MTN. The Goldkey CEO was said to have commented that his 4G license was the most expensive piece of paper he ever owned – US$6 million. Blu Telecoms checked out on the quiet and no one knew what even happened to their license until recently when we gathered MTN bought it. Broadband Home (BBH), formerly Zipnet is also recording zero customers on NCA’s own subscriber base reports. I don’t even know why NCA keeps reporting that. But MTN has recently bought their spectrum too. Surfline and Busy Internet managed to remain afloat for a while but their indebtedness to tower company, ATC Ghana in particular, finally led to their partial demise recently. NCA is now looking for public input on how to handle such situation. What a shame. Maybe they should also have sold out to MTN?!

Tower co-location and local content 

NCA is solely responsible for the tower co-location policy that created independent tower companies like ATC Ghana and Helios Towers. The policy was designed to help operators cut down on the cost of having to spread their own towers across the country, and rather co-locate on towers owned by independent towercos like ATC Ghana, Helios and K-Net. But eventually, the tower fees became a challenge for the smaller operators, largely because NCA’s own negligence and or deliberate inimical policies had destroyed the value for them.

Let me explain – NCA unleashed MTN into the 4G market after just three years of allowing the locally-owned BWAs to run the show without interference. There was a good reason for allowing only local players into that space – it is called Local Content. The entire industry was  and is still dominated by multinationals, so government decided to take a protectionist stance with BWA (4G LTE) licenses to inject some local content into the mainstream. But three years was all NCA could allow, why because, as stated above, government needed money to implement DTT policy and spectrum sale was seen as the only way out. So, in that instance, what was in the interest of the industry was not the consideration of the NCA, but money for DTT implementation. It was like saying, “to hell with local content – to hell with BWAs”.

So, the inevitable has happened – MTN was going to get big with its 4G network and the smaller operators in the space were eventually going to collapse. The simple reason is that MTN had the opportunity to provide 4G on mobile phones, while the local BWAs were barred from doing that, so there was no way they were doing to compete with MTN. The leading BWA, Surfline, managed to eventually get approval to partner with Vodafone to roll out at least one product – Smart Surf – on their 4G network, all in an attempt to make some money and stay afloat. But that was too late.

Surfline has also been making efforts to partner with MTN to roll out nationwide so they can make money, pay their debts and stay in business, but government has refused to allow that partnership to happen for a very hypocritical reason. This same government allowed MTN to acquire Goldkey’s 4G spectrum in addition to their own, but it has taken a position that allowing MTN to partner with Surfline, would deepen MTN’s dominance even further. It is as if to say that at the time MTN was allowed to buy Goldkey’s spectrum in 2019 with the blessing of the NCA, it was not already the dominant player. Now, that Surfline also needs to ride on the back of MTN to survive, all of a sudden, MTN cannot be given any further edge because it suddenly became a dominant player in 2020. Laughable.

Carrying Ecosystem Along

At the launch of MTN’s 25th anniversary in June 2021, the Communications Minister, Ursula Owusu-Ekuful asked MTN to take advantage of its SMP status to carry the entire ecosystem along the path of growth. What is more of a perfect example of carrying the ecosystem along the path of growth than partnering with an obviously troubled operator in a symbiotic relationship that promises, most importantly, to save the smaller player from collapsing?

NCA was fully in the know of the distress of Surfline and Busy Internet every step of the way. ATC Ghana kept NCA fully informed of every detail of its dealings with the two entities. NCA has actually had to intervene on behalf of the two on several occasions just for them to get some respite, which is good. But NCA could also have pursued alternative ways out for the two if it wanted to – particularly for Surfline and the request to partner with MTN. That would most likely have led to a different story today. But NCA has allowed Surfline and Busy Ghana to go into comatose, so that what – the spectrum they control can be harvested for some other purpose?

So, when a regulator, under the auspices of a government sits by and or takes steps that leads to the collapse of this number of industry players, it creates a nagging concern that it may be out to do same to the only surviving player, particularly with some of the things we have started seeing regarding the implementation of the SMP regulations and its impact on consumers who are to be protected. When you juxtapose that against the recent shameful move by another regulator, the Ghana Revenue Authority (GRA), using a rogue entity called Safaritech Ghana Limited to do some “voodoo” tax audit on MTN and claiming that MTN owed a whopping GHS8.2 billion in back taxes, then you can understand why Ghanaians have the nagging feeling that there are attempts to “punish or stifle MTN’s operations.”

Let me rest here.

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