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Telecoms: A new ring for heavyweights

By Nicholas Norbrook
Posted on Monday, 25 May 2009 08:42

The arrival of new international telecoms companies is generating innovation and cutting call costs

Ghana has been drawing in telecom operators from around the world like bees to a honey pot. With its strong and unified licensing regime, decent growth prospects from gold, cocoa and soon oil, the country will become a telecommunications hub to rival Nigeria. When added to the impending growth of international bandwidth from undersea fibre-optic cables and the country’s proven track record on attracting outsourcing work, the sector should boom for several years to come.

No fewer than five mobile phone companies are already active: the South African giant MTN, local firms Tigo and Kasapa, Vodafone (the UK world leader which bought the historical operator Ghana Telecom in a controversial deal in mid-2008) and Kuwaiti-owned Zain, which launched in December 2008. Squeezing themselves into the party are Globacom, the successful Nigerian operator, which will launch services in mid-2009. This is an unprecedented number of heavyweights for a market as small as Ghana – and subscription levels have been quickly rising as companies’ marketing teams race to gain a market share.

A technological edge?

The National Communications Authority’s regulatory head, Joshua Peprah, says that the 12m subscriber mark has just been passed, up from only 1m in 2003; this puts penetration at over 50%, with the prospect of 60% next year. The intense competition has focused the bigger operators on capturing the lucrative high-end market. In a struggle that is becoming familiar, Zain and MTN have been toe-to-toe on finding a technological advantage. Zain has offered a cutting edge 3.5G network, able to deliver high-speed internet access, the first of its kind outside South Africa. After Zain piloted the network live on television in December 2008, MTN hit back by launching its own 3.5G services.

As the less-capitalised operators struggle to keep up, there could be fierce price battles ahead. Judging by Vodafone’s recent investments, including a big rebranding of Ghana Telecom, the company is indicating that it is prepared to hold its own.

Official promotion of the sector has been proactive and effective over recent years. A national fibre-optic backbone has been partially rolled out to increase bandwidth and to lower costs, and not just in Accra. A recent report by Ernst and Young praised the country’s unified licensing regime, which blurs the boundaries between fixed-line and mobile operators, allowing them to offer internet and voice, making it harder for monopolies to bed down.

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