Are telco promos a show of wealth or survival technique?

The perception many holds is that telecommunication companies operating in the country are wealthy and are making good money here, enabling them to repatriate huge sums to their mother companies whether in South Africa, Britain or India.

Others contend that it is their abundance of cash that makes them to sponsor events,run promos, give freebies or launch new advertising campaigns. But the reality is far from this according to External Director of Vodafone Ghana, Gayheart Mensah.

“Our indicators show that if a telco went to sleep for two months without an ad campaign, product activation or sponsorship, that telco will be behind the pack and catching up will be hard,” he asserts, adding, “with a no-show for just two months, you see your subscriber base dropping, credit card sales becoming stagnant and mobile money transactions falling behind.”

The Vodafone Ghana executive also laments over the heavy capital needed to set up infrastructure with little support from the regulator or state.

From 2014 to2016 Vodafone says it paid GHc302m VAT to the state, GHc186m in CST, GHc148m in WHT and PAYEE of GHc40m. During the period also, it paid the SSNIT contributions of its staff totaling GHc24.4m while creating nearly 620,000 new employment opportunities.  Last year, the company also exhausted GHc10.7m on health programmes and interventions as well as GHc1.6m on education.

MTN, also alive to its tax obligation to the state paid GHc729.3 million and US$26.1million in various forms of charges to the state in 2015.The payments includeGHc675.6 million to the Ghana Revenue Authority as income taxes, Ghc43.7millionas charges to the National Communications Authority (NCA) and the Ghana Investment Fund for Electronic Communications (GIFEC) and US$26.1 million from Surtax on Inbound International Traffic (SIIT).

Ghana Investment Fund for Electronic Communications (GIFEC), is a government agency under the Ministry of Communications charged with the responsibility to bridge the digital divide between the served and unserved/ underserved communities in Ghana by offering basic telephony, internet, multimedia broadband and broadcasting services to these communities.

GIFEC sources funding from the state as well as donor agencies and it would help if it lends more support to the telcos to install telecommunications infrastructure in underserved communities across the regions.  

MTN has invested GHc67.5 million in 4G technology to provide efficient and effective network for its customers and also ensure that Ghanaian businesses use the technology to gain competitive advantage, generate employment and increase government revenue for development.

MTN Ghana again paid GHc1.1 billion to the government in various taxes in 2016. The payments included corporate tax of GHc713 million (up from the GHc675.6 million paid in 2015), and fees to the National Communications Authority (NCA) and other regulatory bodies.

The company pumped US$143.7 million into capital expenditure used to increasing network capacity, build sufficient infrastructural back-up or redundancy and accelerate network rollout of 4G sites according to former CEO, Ebenezer Twum Asante.

Since the first mobile operator came in existence in 1992, Ghanaians have seen the mobile landscape change from a few people having access to telephones, using payphones, having limited access to where one in every four Ghanaians owns or has access to mobile services.

The regulator, National Communications Authority (NCA) played a significant part in the evolution upon its birth in 1997 ensuring the deregulation of the telecom industry, opening up opportunities for the growth leading to ownership of wireless telephones thanks to investment by stakeholders and the Government.

From Millicom Ghana (now TIGO) ruling the mobile market, industry observers say they failed to innovate and pump in investment to boost the infrastructure base allowing newcomers, Scancom, operators of Areeba [now MTN] to shove it off its leader position and command a leading market share. The company started operation in Ghana in August 2007, having taken over Scancom Limited in 2006 and rebranded to Areeba in 2007. MTN Ghana is the fourth largest company within the MTN Group and the leading telecommunication player in the Ghana.

According to some estimates, It holds 45.6 percent of the voice market share, representing 14 million out of the 29.1 million subscriptions commanding 48.3 per cent of the data market share by having 7.8 million out of the 16.1 million subscriptions.

With Bharti Airtel, owners of Airtel Ghana, merging with Millicom International Cellular,operators of Tigo in Ghana, Vodafone Ghana’s erstwhile second place on Ghana’s telco log has shifted with AirtelTigo overtaking it into to second place. Vodafone now places third with Glo and Expresso rounding up the telco players list.

From simcards selling hot and high to subscribers denying themselves sleep to enjoy free calls from midnight, the telcos have advanced to offering bundle codes which subscribers can opt for to enjoy specific offerings be it voice or data.

However despite the growth boom in cell phone ownership, the telcos express concern about high and numerous tax payments. The huge expenditure on batteries at cell sites thanks to irregular power supply is another concern as are depreciation of the cedi which leads to increase in import bills, fiber cuts and thefts which affect quality and efficient service delivery to customers.

Customers have also seen higher charges for the voice calls they make and data they use. From November 1, 2018, mobile phone service users started paying more for the services rendered by the telcos thanks to the recalibration of the VAT, NHIL and GETFUND levies.

Finance Minister, Ken Ofori Atta explains that the National Health Insurance Fund Levy and the GET Fund component are separated from the old 17.5% Value Added Tax(VAT) regime, thereby making the two components straight levies of 2.5 percent each.

The forward march of the telecommunication companies has also meant they are not just connecting people but also catering for payment solutions to financial institutions and retailers, and also offering data storage and communication solutions to different businesses with Mobile Money (MoMo) transactions becoming a critical money transfer system for millions of subscribers.

With smartphones users in Ghana crossing 20 million there’s now a high demand for data services to keep presence on social media platforms like Facebook, Twitter, Instagram and the rest.

Telecom industries are also working in cooperation with international companies to provide value to customers such that large international multinational companies can acquire purchasing rights and telecom properties in Ghana or acquire licenses to venture into new operations.

By Michael Eli Dokosi