Balancing Act (London)
Russell Southwood
12 May 2008
interview
London — The dead hand of the Ghanaian Government has prevented a good market from reaching its full potential and becoming a great market. Everyone knows what needs to happen but somehow it never quite seems to get done.
Nevertheless competition in the mobile sector is about to hot up. After lengthy delays Ghana Telecom (with its One Touch mobile subsidiary) looks likely to be sold to an international player. Zain looks likely to launch operations in Q3 of this year and a sixth licence will be granted, probably to the modest and retiring Mike Adenuga of Globacom. In this issue we publish what is probably the first interview with Zain's new CEO, formerly CEO with One Touch, Philip Sowah and we also look at the rise of VAS services in an interview with Rancard Mobility's Kofie Dadzie.
Back in Ghana after a three year absence, the most striking thing is the growth in Wi-Fi hot-spots both pay-for in public spaces and free in hotels. There are also several confident wireless ISPs including Busy Internet and iBurst. However, the joys of accessible bandwidth were rather undercut by a city-wide power cut: one step forward, one step back.
The Government's long backlog of past messes (Ghana Telecom, Westel and Voltacom) is shortening but it's been over five years and counting. Westel has been sold to Celtel who will relaunch as Zain this autumn.
The Government is still in negotiation with Vodafone (who had people in the country for two weeks doing due diligence) and France Telecom. Other operators - Russian and Indian - were mentioned but these hardly fit the criteria that everyone seems to have set: respectable international operators capable of making the required investment. The company is currently ludicrously over-staffed (3,700 people) but the Government appears to have made no effort to pick up the costs of making anyone redundant.
The National Infrastructure Company - which will based on the Voltacom fibre assets along with the in-fill network Huawei is building - will appoint a professional CEO but will inherit the Voltacom staff and stay part of Government. Not exactly the recipe to light the blue touch paper for significant change.
SAT3 prices are down to US$2,250 on the basis of the GISPA deal but Ghana Telecom now seems to be offering these to all takers, prompting GISPA to renegotiate. At a national level, both market leader MTN and Tigo - frustrated at the quality of Ghana Telecom's offer - are building their own fibre networks. MTN may be no 1 (with over 50% of the market) but customers are unhappy with current levels of network congestion. The NCC's public ultimatum to the operators (which seemed to follow a similar move by Nigeria's NCC) seems to have disappeared into the mist. All the mobile operators are selling GPRS and EDGE.
There will soon be six operators in a licence process that it's hard not to believe will result in Globacom entering the market. But with a total potential of 10-11 million subscribers, there may well be enough for everyone despite the predictable moaning about too many operators.
Kasapa (which will soon be bought by an international company) is offering its network to ISPs to help them sell Internet services, giving them about a third of the revenues. By the end of 2008 or early in 2009 it will introduce EVDO which will ratchet up the expectation level in market. Coverage is currently 7 out of the 10 regions in the country.
In terms of the priorities of the regulator NCA, it will first make a 3G allocation to existing operators before moving on to making Wi-MAX spectrum allocations. It still maintains that VoIP is a technology and if you have a proper licence you can do it. But unlike Kenya's CCK it has made no move to give ISPs a new licence to include VoIP and this undoubtedly will hold up the arrival of Triple Play.
The NCA says that the Wi-MAX licences will have "Triple Play capabilities". Unfortunately NCA has to follow the rather slow-moving Government that has ruled out more liberalisation while it offloads Ghana Telecom. It remains to be seen whether the process will pick up speed once that deed has been done.
Zain Ghana's Sowah will offer customers a "Rolls-Royce" network.
Q: So how long were you with One Touch?
Three years and before that I was in the USA as an e-Procurement Manager for Becton Dickinson and prior to that, I was with IBM Global Services.
Q: When will you launch?
It will be this year but I can't go into details. We will launch as Zain as the rebranding of the other Celtel operations will happen over the summer.
Q: What will be the extent of the network at launch?
We're expecting to have a substantial proportion of the country covered and we will not have the levels of congestion of our competitors. We're both building in significant capacity to offer higher service levels and for a higher level of customers.
Q: What's you market entry strategy?
We can see some of the shortcomings in the market: for example, quality of service and customer service and we think these are areas we can do better at. We will also launch our One Network offer and all other parts of the Zain promise.
Q: What about price?
Compared to other countries Ghana already has quite low prices. There's no advantage in having a price war and it's not part of Zain's strategy.
Q: What's your target number of subscribers?
In every market, Zain's goal is to be number one. It's our intention to be as close to number two in the market as possible in the next couple of years.
Q: What's the total potential in the market?
Every time we set a target, we exceed it. The current penetration figure we think can be achieved in Ghana is 55% but who knows?
Q: What will the impact be of the sixth licence entrant?
We do not think it is necessary at this time. With Zain coming to market and Ghana Telecom (with its mobile subsidiary One Touch) being sold, there's enough additional competitive activity.
Q: Who would you like to see buy Ghana Telecom?
As a Ghanaian, I'd like to see it run by an well-know international operator. That would make most sense.
Q: Will Zain be introducing GRPS and EDGE?
Yes, at a very minimum. 3G is being considered because we are truly building a "Rolls Royce" of a network to make the user experience truly different.
Q: What about mobile data services?
We're not tapped in there at all so there's potential for SMS and SMS-based services and data over GPRS and EDGE. Ghanaians love music.
Q: You bought Westel which is not a mobile operator. What are you going to do with things you bought that don't relate to the new operation?
Essential Westel is an international gateway and some subscribers. We will give the existing subscribers service but how has not been finalised. Our starting point is that they will get service at a higher level.
Q: Will you build fibre into your infrastructure plans?
We will do the business case for fibre but will start with microwave infrastructure. Of course, we can lease fibre from other operators.
Q: What do you think of the Government's National Infrastructure Company?
It's an interesting idea but I don't have updated information on it. There's a meeting to bring us up to date (next week). The idea has to be managed very carefully. But a number of operators already have fibre networks and therefore it might never be profitable.
Q: What do you think of the current level of SAT3 prices?
Our understanding is that Ghana Telecom will be giving quotes to operators but I have no sense of the pricing yet. It's being discussed.
Q: What did you learn from your time at One Touch?
I learnt an enormous amount including a good understanding of the mobile telecoms environment in Ghana. It taught me how to do a lot with very little!
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