Elephant in the room: Government’s Valueless Golden Shares in Telecel and AT Ghana – Part 2

The first instalment of this two-part article looked at how government has failed to show up when there is cash call by the two telcos in which it has held golden shares since they entered into the market.

It also pointed out that if only government had just showed up for those two telcos, we could have prevented a situation where today, MTN had to be named an SMP just to allow the rollout of measures to fix the yawning industry gap that government and its agencies either sat by and watched happen or sometimes even actively played a role in worsening. It is not a secret how government sold 4G spectrum at a political price of Us$67.5 million in 2015, and in the process, kept the very telcos in which government has shares totally out of the space for years. It is also not a secret how in 2022, two years after naming MTN SMP, government allowed them to buy out two 4G players, while other telcos did not have 4G networks. 

Let’s just move on to part two:

Due to government’s failure to protect its own interest in Vodafone and Airtel and in the process, and as a result, failed to save the entire industry from grinding to a monopoly, Vodafone, Airtel and Tigo have left the market. Glo and Expresso just collapsed. In fact, Glo continued to hold on to its license for about a year after seizing operations. MTN has been named an SMP and measures are in place to ‘protect’ the other remaining telcos from collapse. But it does not seem to be working because, again government has not woken up to the reality that what these telcos need is real capital injection, and that kind of investment would require the government, which still holds 30% shares in Telecel Ghana (former Vodafone) and 100% in AT Ghana (former AirtelTigo), to also cough up some money for the purpose. MTN has earmarked US$1 billion for invest in five years (2021 to 2025) – that is over GHS2 billion a year. Just half-year 2024, MTN reported investing GHS2.8 billion. As a result, MTN has grown data market share even further to over 80%. The other telcos still have nothing on MTN, in spite of all the SMP measures to protect them against MTN.

Investment

Speaking of investment, Telecel entered the market in 2022 with a promise to invest at least US$500 million in three years. Lots of industry experts had doubts about Telecel’s claim, but government of Ghana seems to know something the rest of us don’t know, so they have given Telecel a chance. BUT, our sources in the UK informed us that Telecel paid absolutely nothing to the Vodafone Group for the 70% shares in Vodafone Ghana. They only inherited the assets and huge liabilities to the tune of about US$150 million. Indeed, when Vodafone announced plans to sell 50% shares in its Spanish operations to an investor, they stated the possible sale price. But details of the sale in Ghana is shrouded in secrecy. Yet Ghana government via the NCA only accepted some US$10 million from Telecel as part payment of Vodafone’s US$25 million licensing fee arears and gave Telecel a payment plan for the balance, without checking the veracity of their claim that they had $500 million waiting to spend in Ghana over the next three years. Now when we ask Telecel the money question, they deliberately steer clear of numbers and speak a lot of English.

We were also informed about a year ago that some company called Hannam Investors from the UK, were about to partner the government of Ghana in a joint venture (JV) to invest some US$150 million to recapitalize AT Ghana and save jobs. Till date that promise has not materialized, most probably because the potential investor is dragging its feet due to the 2024 political elections are very close in Ghana and the investor is not sure whether the ruling party will win the elections, so they need to wait and see if the next government will be interested in doing business with them. Meanwhile, we are reliably informed that the named investor in AT Ghana has a Ghanaian real estate developer (name withheld) as local partners. Just stand by for more details on that soon.

Before Telecel pushed its way into the Ghanaian market with promises of being ready to invest US$500 million into the network, government was courting duopoly ideas. The plan then was that, once Vodafone Group left, government, as the 30% minority shareholder, was going to add Ghana Telecom (Vodafone Ghana) to the AirtelTigo marriage and create one entity with about 40% market share, so that the market will have only two operators – MTN and the entity created from the three other telcos. Telecel’s coming has botched the duopoly agenda.

Suggestions for the way forward

But I personally think the duopoly agenda could still be one of three alternatives to save the industry from sliding into a monopoly:

1. Government (whether NPP or NDC) can find a way to take Ghana Telecom back from Telecel and merge it with AT Ghana; then invite some identifiable Ghanaian millionaires with disposable income to partner with government to invest into that entity and make it a viable competitor to MTN. Speaking of local millionaires, I did mention that the named investor for AT Ghana has a local real estate development as a partner. That could be a starting point. Under that arrangement, we can then draft some of the local experts of international repute like Selorm Adadevoh, Ebenezer Asante and others, who worked the magic for MTN Ghana and continue to do same for the MTN Group, to run the show. We can make a better headway than what we are doing now.
2. Second alternative is government can float its shares in AT Ghana and Telecel Ghana to raise funds locally and from around the world to make it viable. I wonder if Ghanaians and even other investors will find the two companies viable enough to invest in though. But as things are now, government is also not bringing anything to the table. It is most likely that, one of the reasons serious investors steer clear of both AT Ghana and even Ghana Telecoms is because of this government insistence on holding on to its golden shares, which brings nothing to the table. So, let’s take the two telcos public like MTN has done. After all government is holding those shares on behalf of the public. Besides, Telecel has said that in five years after acquiring Vodafone Ghana, it will float shares in all of its West Africa operations. Clearly, there is something to be said for equity. We can try that option.
3. Thirdly, we can also give some crazy incentives to some of the big industry players to attract them into Ghana. Players like Orange, Etisalat and others who have operations elsewhere in Africa but are not in Ghana. I personally don’t think Telecel is necessarily the kind of big boy we need to provide real competition for MTN Ghana. AT Ghana is even worse. In fact, I am even told that Telecel does not want to hear the name AT Ghana in any discussion about a merger, given the level of liabilities that AT Ghana presents. So, maybe the way out is to bring in other big ticket players on the back of some ridiculous incentives to take over both AT Ghana and Ghana Telecom (Telecel Ghana). This will not be the first time Ghana will be heavily incentivising multinational telcos to come into the country. All the telcos which have ever operated in Ghana were given waivers on equipment import for more than a decade as a precondition for their coming into the country. I think it is time to go that route again and save the industry from grinding to a monopoly.

4G/5G Universal Access

Now government has awarded a 4G/5G license to a single wholesaler as one of the ways to level the playing field in the market. I fully support that in principle. It will definitely do something for the market, but how big, we are not sure. This is because the big play in Ghana’s telecoms industry is still in 3G/3.5G and just a fraction of 4G. MTN recently did a complete overhaul of its network to ensure that it offers the best of experience in the 3G/3.5G space. There is no real business case anywhere for 5G yet. So, again, as always, MTN is strategizing and investing in what matters to Ghanaians, to position itself and hold on firmly to its overwhelming lead, and, per the numbers, the strategy is working. We hope that the 4G/5G wholesale license will lead to generally low cost of operations to all telcos and thereby lower data prices for consumers. But one cannot be sure the extent to which it will correct the market imbalance, particularly if measures are not put in place to ensure some real capital injection into the other telcos, to make them more attractive to Ghanaians.

As stated above, in principle, I support the universal wholesaler idea in the 4G/5G space for what it is worth. But a part of me is also afraid that we may have only created another monster, which may not fully protect the lambs in the industry from the existing monster, contrary to what we envisaged.

This is where we lay the elephant in the room to bed on this government golden shares in Telecel Ghana and AT Ghana.