West Africa--the New Telecom's Frontier?

West Africa--the New Telecom's Frontier?

By E.K.Bensah II 

From Ghana Telecom to Nigeria Telecom, the privatization bandwagon is on course in the ECOWAS region. If you recall that last week we touched on the West African neighbour of Mali's landline set for privatization by the end of the year, you might also remember that NiTel was broached. Although incoming Globacom made some noises a few weeks ago supporting GT's divestiture, the country itself has kept rather mute on what lessons the GT/Vodafone debate might hold for the regional giant. 

It has always often been said that if Ghana is the gateway to West Africa, Nigeria is the destination. This much was confirmed when a couple of editions ago, we broached the issue of Stanbic Bank's acquisition of a Nigerian bank after having missed the Ghanaian one - Agricultural Development Bank --by a whisker. In the telco industry, the situation is not that much different. The exception in the drama that has unfolded over GT is that Vodafone has itself kept mute over its potential acquisition of NiTel. There has been little in the press to suggest that it remains interested in NiTel.  

Nonetheless, the Nigerian parliamentarians are unperturbed and have set the pace - unlike in Ghana - on ensuring some degree of accountability. 

Judging from the Nigerian press at least, the debate has been non-existent to the fever-pitch degree here in Ghana. Instead, the lawmakers, accepting a major contention of NiTel having failed, have sought to find out why. To this end, the Senate Committee on Communications is to probe the roles played by concerned stakeholders in the fall of NiTel. 

Nigeria's Vanguard newspaper reports that some of those that contributed to the downfall of NiTel virtually defrauded the company of billions of naira in dues. Chairman of the committee Senator Sylvester Anyanwu at a press briefing alleged that the private operators were using as much as 75% of the capacity and infrastructure of NiTel for free, with some of them "enjoying a two-year rides in the company". 

Concrete steps have been taken to hold such people accountable, including a letter to the President of the Republic Umara Yar'Adua asking him to turn down the appointment of BNP Paribas as consultants and advisers in their repeated attempts at selling NiTel. Secondly, the Committee has managed to trace the origin of NiTel's downturn to 2003 when a putative Dutch company-Pentascope--managed it [does Telenor in GT come to mind?] turning NiTels "profit profile into a loss despite the inflow of a N40 billion unsolicited loan for the company." Third, unlike the lack of accountability surrounding Ghana's National Communications Authority (NCA), the Committee has asked the latter's Nigerian counterpart--better known as the Nigerian Communications Commission(NCC)--to "get off the fence and take a position in this ongoing debate and investigation  of the irregularities in NiTel." Finally, the Chairman of the Committee listed MTN Nigeria; Starcomms, Globacom; Shell; Ericsson; First Bank; Nigeria Liquefied Natural Gas among many others who have failed to give account of their financial obligations to Nitel. This is no different in Ghana, where many companies owed GT millions, but was never broached in the contemplation of the sale to Vodafone. 

In order to ensure that there is significant movement, the committee has asked the security agencies "to ensure that current and former staff of companies which played a role in the past botched privatization of NiTel were made to account for their deeds." These include the Bureau of Public Enterprises(BPE), which has claimed to have played no role in the whole affair--despite the fact that, as the paper avers, "former staff of the BPE…played inglorious roles in the …sale of NiTel". Unlike in Ghana where the NCA issued a fine and left no room for enforcing the fine, Nigeria has gone a different way. Failure to respond to the above queries, the paper continues, will force the Committee to invoke its powers under certain sections of the Constitution to ensure that they comply.

Vivian Reding's Unwitting Push of Vodafone to Africa?

Like a bad smell, the ramifications of the acquisition by Britain-based Vodafone will not go away. Although most Ghanaians seem to be tight-lipped now about the sale, especially because they have been put before a fait accompli, elsewhere, the news is not so bright for Vodafone. 

Forget the fact that Vodafone is in court in India over tax issues at the moment. Let's just troop down to the UK itself for a while. According to Mobile News, the UK and Spain used to be Vodafone's "cash cow". Now, the revenues in those markets are not so hot. This is the reason why it's been necessary for Vodafone to expand into Eastern European and African markets. The article reports that in its own home market of the UK, it has "shed customers." With its churn up, "its voice revenues were down."  

On top of it all, the so-called combative European Commissioner for Information Society Vivian Reding - characteristically hot on the heels of creating opportunities for consumers - has managed to sideline a number of the mobile phone operators with her campaign on termination rates and the cutting of roaming charges that have normally been rather prohibitive. Companies like Vodafone have seen the future as not being bright, and jumped the pond to escape the wrath of Reding. As a consequence, 140,000 customers have been added to the Vodafone giant in Eastern Europe, Asia and Africa.  

The coming of Vodafone to these markets have however coincided with phenomenal developments in the mobile phone, or telco industry--and no where has this been more significant than in West Africa. 

Mali's Privatisation Process Unclear

It is a fact that come the end of 2008, Mali's landline SOTELMA will be privatized. Apart from the fact that we now know that BNP Paribas is a consultant/transaction adviser for the process--much like in the NiTel process above--little else is indicated in the press about the state of play. It appears that although the francophone press has touched on it, the Anglophone press probably could not care less! 

Burkina Faso's Landline Goes for IPO

Meanwhile, also in West Africa, the small ECOWAS country is pursuing an Initial Public Offer(IPO) for a (private) 20% stake in its state-owned ONATEL. The francophone online paper lesafriques.com reports that the state will retain 23%, whilst personnel will get 6%. It's unclear what happens to the remaining 51%! 

Regulating Guinean Telcos, Re-Nationalising Soltelgui

The small ECOWAS country will be getting its equivalent of Ghana's NCA in a regulatory authority that has yet to be named. Tibou Kamara, the Guinean Minister of Communication and New Technologies, has indicated that the month of August will see the country's first regulatory body. It is interesting to read that the Minister believes that a lack of a regulatory regime and a body that can play its rightful role is a "handicap" in the "normalization of services rendered by operators." He says that it is not a witch-hunt, but an opportunity to ensure that all actors [in the industry] have a level playing field. 

In the meantime, the country has the distinction of being the first out of Mali, Nigeria; Ghana; and Nigeria listed here to have 60% of its shares sold back to it by Telekom Malaysia by the end of September 2008 in a Settlement and Transfer agreement (STA). TeleGeography maintains that Soltelgui--Guinea's state-owned company--was established in 1993, only to be privatized in the same year that Ghana Telecom was born--1995, when Telekom Malaysia purchased 60% of a stake for $US45million. After a decade of ownership, it seems the Malasyian telco has had enough and is up and leaving "as part of a broader review of its international investment strategy to

focus on geographic regions closer to home. Could the same happen some day in Ghana? 

Ends

When will the National Communications Authority stand up?

The NCA is an agency of the government with oversight to, in effect, regulate the telecommunications sector and implement terms of Ghana’s National Telecommunications Policy. According to the policy (2004) that can be downloaded from the Internet, while the Ministry of Communications is “responsible for the definition and elaboration of Government policy regarding telecommunications”, the NCA has a number of roles that it plays in implementing the policy, which include: “regulation of competition, including interconnection; tariff regulation consistent with Ministry policies; monitoring of operator activity, performance, and compliance”, and last but not least “consumer protection.”

Reading the policy itself is enlightening, for the policy sounds robust. There is a section on “Principles of Transparent regulation” that explains that NCA “shall promote public participation in and awareness of its activities and ensure that the public has adequate access to sector information.” Only last week, I checked to see whether the website of the NCA that is still under construction, and with some limited information about the sector, has managed to offer some new information. There is still nothing. Neither is there what there ought to be--as stipulated in the policy: an Annual Report in collaboration with the Ministry of Communication publishing “up-to-date industry information…” made available “for public review.”

Protection for Whom?
In what would prove to be an unprecedented move last year, the Authority not only threatened ONETOUCH and MTN to stop selling re-charge cards, but that they should also improve the quality of their service, otherwise huge fines would be slapped on them. This was a historic feat of epic proportions it appeared, for even with the psychedelic MTN plane then-still-perched at the Tetteh-Quarshie interchange and MTN flags virtually drowning any Ghanaian ones, the Authority barked. At the eleventh hour, the Authority yielded, allowing both mobile providers get away with only an agreement to improve their services.

I don’t know about you, but I don’t call that consumer protection.

Giving customer service a new life?
Then there is the recent case of Gateway Broadcasting Services (GBS) that entered the country in October last year. I do not know of anyone--and I know three official establishments around my workplace use GBS--that has been able to get through to GBS customer service. Beyond one who had given out his mobile number to subscribers (regrettably, he is no longer working for the company), no-one else can be contacted when one’s service is cut off -- either accidentally or not. When your payment has been made, the several landlines that have been given will forever put you through to a call centre operating outside Ghana in…Southern Africa, where, it stands to reason, there is a more clinical approach in dealing with you, given that the people are not in the country. As helpful and “nice” as they sound, nothing beats having Ghanaians help when I want my service re-connected , even if I have to have to lose my voice in doing so.

The anecdotes aside, such continuous practices remain an indictment of the NCA’s work. As a regulator of the telecommunications industry, it behoves it to ensure standard regulation--as stipulated in the policy. To wit: "all public telecommunications operators shall be required to establish service level agreements with their customers, which identify the minimum quality of service standards to which customers are entitled, and the remedies and compensation available when service falls below such standards."

Concrete steps
The biggest step to ensuring regulation, in my humble opinion, would seem to be a clear and necessary *adoption* of the National Telecommunications Policy as a working document for all in the first place! Another issue is of toll-free numbers. The other day, the sixth biggest bank called to inform me that they now have a toll-free number that operate 24/7. If banks can do it, why not our MDAs? And certainly, why not NCA? Just a small query: I noticed the toll-free number works on the ONETOUCH network for now. In the event of government passing through any privatisation of GT by way of a totally-unnecessary emergency bill, will Vodafone not seek to make profit by disbanding the toll-free nature that GT has a great interest in maintaining?

Nigeria’s NiTel to be Privatised…for Vodafone?
As if the attempt to privatize Ghana’s national provider Ghana Telecom is insufficient, British-based Vodafone is ready to hit the Nigerian market with the acquisition of ECOWAS neighbour Nigeria’s only landline provider. Rumours and accusations of the phone company being “beleaguered” and “inefficient” don’t wash with me. They are code-words for any excuse to privatize. An article in Nigeria’s *Punch” newspaper actually goes further arguing that: “…we can be certain about one thing: NITEL is currently bedeviled[sic] by multifaceted problems. These problems include malfunctioning lines, erratic billing system, poor customer satisfaction, infrastructural decay and a backlog of worker’s salaries…” It seems to me that chance would be a fine thing were NiTel to escape privatization.

NiTel Privatisation Not New
As far back as May 2002, then-President Obasanjo was planning a divestiture of the state-run phone company. It had been scheduled for March of that year, but had to be postponed for September 2002. It is interesting to note that still at that time, 51% was what was being offered to the so-called strategic investors!

On a more serious note, whereas the incumbent Ghanaian administration has put forth 70% of GT to be privatized, even the horror stories associated with NiTel have warranted 50% to Vodafone. Why such discrepancy one wonders? Is it that Ghana Telecom has more of these calamities at its doorstep than NiTel? Let’s examine them for a second. Last time I looked, GT was offering broadband4u (broadband4u.com.gh); dialup4u; ExZeed company which offers 24hour service to ONETOUCH subscribers, where MTN has not a 24-hr hotline, and Tigo’s is non-existent (exists only as a number); a mobile provider since 2000 (albeit itself bedeviled with astronomical prices when it started, with sim cards then going for around GHC150!); Ghana Telecom University; EasyFone (which enables landlines to be set up more easily than ever before).

According to the reports I’ve been reading, M-Tel, NiTel’s mobile operation that is a year younger than NiTel (having been established on October 2001), has only 176,000 subscribers. Compare that to MTN Nigeria that has 15,873,000 active lines. Switch to Ghana, and we find that where MTN Ghana is around 4 million subscribers, with ONETOUCH around 1.4m. That is subscribers over one million, yet Nigeria’s is able to attract only a fraction. Despite this, it is being sold for 50%!

Is it me, or is there something odd about the whole rationale of the GT purchase?

Still always about politics?
Then I think, and think some more, and remember how early last year, South Africa’s Standard Bank, operating under Stanbic Bank, was so keen to take over state-owned Agricultural Development Bank (ADB). One of its main motivations for the attempted sale (which incidentally, the government, according to financial papers two weeks ago have *de-prioritized*) was so that it could use the entry of Ghana as a gateway to penetrate the Nigerian market. A year ago today, Reuters reported that Standard Bank had bought a part of Nigeria’s IBTC Chartered Bank Plc, which expertise is in investment banking with 55 branches across Nigeria. Standard Bank spokeswoman Kim Howard would say that "If you are going to have a pan African strategy, you have to include Nigeria."

Looks like this time, they decided to strike Nigeria after an attempted one here in Ghana. Whether they will succeed remains moot. Whatever will happen with the sale of GT, it has become crystal-clear that the stage has certainly been set for a new revolution before our very eyes.

Forget the Industrial Revolution. We are all sitting at the cusp of a revolution that implicates a sector so critical to our lives we could never have imagined. To think that a consortium of former MTN executives are bidding—so the telecoms newsletter Balancing Act reports – for NiTel is not just a reflection of the motivation of big people with big capital, but where the next wars might be fought. Forget your Cold War. Prepare yourself for the Telecoms Wars.