allAfrica.com: Ghana: Invitation to Re-Colonize - is Ghana for Sale? (Final) (Page 1 of 2)

Ghana Telecom's 1.4 million mobile customers represent just over 0.5 percent of Vodafone's global subscriber base of 260 million. How strategic is that for Vodafone?

Even if we achieved 100 percent mobile penetration with a relative small population of 23million people (which is less than 10 percent of Vodafone's subscribers) Vodafone's stated target market share of 25 percent will only represent 2.2 percent of its current total subscriber base and that won't be achieved for another 5 years at least. To the extent, therefore, that this is strategic for Vodafone it must be as a beachhead for further and greater expansion of Vodafone's interests across the sub-region.

Much of the sub-region, however, is French-speaking and given the hold France has over many of these countries, France Telecom/Orange are probably better-placed to dominate in those markets. Vodafone itself has struggled to gain a foothold in France; it has held a substantial but minority stake in SFR France for a long time, but it has been unable to secure controlling interests to date. So it remains to be seen whether or not this turns out to be as strategic for Vodafone as the government assumes it will be for Ghana.

But is it really strategic for Ghana to hand over its fixed telecom network to a company which although is the world's largest mobile provider by revenue, has relatively little experience of running or investing in building fixed telecom networks anywhere in the world? What exactly will Vodafone bring in terms of deep and in-house experience to this business? Yes, in December 2007 Vodafone acquired the assets of Tele2, a fixed telecom operator in Spain and Italy and it has minority interests in Arcor (the German fixed telecom operator). It also provides fixed broadband services in other countries but mainly as a virtual operator using the facilities of the local fixed incumbent.

However, fixed telecom services contributed less than 6% to Vodafone's total service revenues of some £33Bn (US$66Bn) in 2007/2008. The share price, profitability and much of what matters to Vodafone's shareholders are dependent on its mobile revenues and properties and not its fixed telecom, broadband assets or operations. Fixed telecom services are therefore not as strategic to Vodafone as its mobile assets although they clearly see it as complementary. This has anumber of potential implications: (1) if push comes to shove Vodafone can and will jettison that part of the business (2) that part of the business is unlikely to be prioritized for significantly more investment going forward, especially in a place like Ghana where the fixed infrastructure is woefully under-developed.

As we move inexorably toward the digital world, broadband will become strategic for all economies. Today, Ghana Telecom's broadband reach is limited indeed, primarily to a couple of metropolitan areas and it will be in dire need of further investment if we want to extend that reach to many more of our fellow citizens.

The rapid diffusion of internet services in mature economies over recent years has been driven largely by broadband but we are also learning that with increased speeds, our appetite for greater bandwidth consumption is becoming voracious which in turn increases the investment required to upgrade and extend the network . But at the best of times, broadband business cases are hard to justify which is why in places like Singapore, Korea and Japan governments are taking the lead on these investments. I do not expect Vodafone to invest in the extension of broadband in Ghana beyond where it is profitable and much of that will depend on regulation if the current deal stands.

The government's e-government and other ICT initiatives for our schools, hospitals and much of our future economy will depend on a robust broadband infrastructure. Yet this single most important strategic asset has been handed over to Vodafone which has by default become a monopoly provider when few, if any, competitive alternatives exist. We are proposing to transfer a public monopoly to a private one and that cannot be good for the future of our country.

What people forget is, as the so-called Negroponte flip (posited by Nicholas Negroponte, Director of MIT's Media Lab, who argued that over the long term, services that used to be delivered by wireless (e.g. radio and TV) will go over wireline (i.e. broadband) and what used to be available only by wireline (i.e. telephone) will be will accessed wirelessly (e.g. voice calls via mobile)) becomes a reality, power shifts from traditional broadcasters and telecom operators could become important in the delivery of broadcast services. Many of us already listen to our favourite Ghanaian radio stations from JoyFm, to Peace and Adom FM over broadband. As telecom operators deliver TV and other information services - as they already are in many countries around the world - any future national emergency will not only require that the state takes control over Broadcasting House, but also of all telecom network operations centres. With this new reality in mind, do we want to handover our national common carrier to a foreign-owned company?

This deal will not pass in most economies; not in Britain where the monopolies and mergers commission will rule the fixed telecom portion anti-competitive or in Canada, much of the European Union or the United States. Many countries impose strict limitations on the ownership of telecommunications and broadcast services in part because they are deemed a critical public utility, integral to one's sovereignty - and for the security reasons I have hinted at above.

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