Ghana telecoms companies look to boost mobile data volumes

As Ghana’s mobile telecoms market matures and incomes in the country rise, its telecoms companies are increasingly looking to boost mobile data volumes – a lucrative part of the market that is growing at double-digit rates. Data services could help bolster average revenue per user at a time when margins are under pressure from rising costs and slowing voice demand. While income levels suggest that data is still expensive for many Ghanaians, operators are having some success.

“Data packages are driving growth and have been doing so for 12 to 18 months,” Gareth Townley, managing director of Eaton Towers Ghana, a telecoms infrastructure company, told OBG. “There is money to be made on data if it is done soundly.”

Market Picture

Mobile data subscriptions increased from 17.3m in September 2015 to 19.33m in September 2016, for a penetration rate of 69.22%, according to the National Communications Authority, the sector regulator. Similarly to the voice segment, the market leader in mobile data was MTN Ghana, with 9.75m subscribers and a market share of 50.4%. Second was Vodafone, with 3.31m subscribers and a 17.2% market share. Airtel was close behind, with 3.09m subscribers and a share of 16%, followed by Tigo, with 2.87m subscribers and a market share of 14.9%; Glo, with 265,100 subscribers and a market share of 1.4%; and Expresso, with 40,200 subscribers and a market share of 0.2%.

There is a large gap between mobile data and mobile voice subscriptions, which numbered 37.2m in September 2016, which suggests there is a lot of room for data growth by encouraging voice subscribers to start using data services as well. This alone is a potential market of almost 20m. “Voice revenue is positioned to be flat in the short term, and SMS is a dying breed,” Townley told OBG. “Social media on smartphones has taken off, while e-commerce is just beginning and will need a sharp increase in e-money usage to grow strongly. People want Facebook and Twitter, and want to shop online.”

This, in turn, is driving growth for telecoms infrastructure companies, as the expansion of 3G services and the impending rollout of 4G across the country requires further backbone development.

GOING FOURTH

In 2009 MTN was the first company to launch 3G services in Ghana, followed by the other five operators, and in June 2016 the South African-owned operator launched 4G LTE services in all 10 of the country’s regions. In December 2015 the company paid $67.5m for the licence to operate 4G on the 800-MHz spectrum and became the first mobile operator to launch 4G services. At the time of launch, MTN was operating 400 4G sites across the country, with the aim of scaling this up to 475 throughout 2016 in an investment totalling $18m.

While MTN is the only mobile operator offering 4G, a number of other players have been awarded licences on other spectrums, including Surfline, Busy Internet and Blu Telecommunications, all of which were operating by early 2016. Vodafone Ghana is also considering launching 4G services, though company officials have said that the price tag for the licence is unusually high by regional standards, and that the operator will explore other means of accelerating its mobile internet speeds.

Handset Costs

Unsurprisingly, given the cost of the latest Apple and Samsung products, one of the biggest barriers to the growth of the mobile data market is the relatively high cost of smartphones in what is still a low- to middle-income country where the minimum daily wage is just GHS8.80 ($2.27). The price of smartphones has started to fall though, and feature phones with some internet-enabled apps are even more affordable. However, the government continues to levy a tax on smartphones, despite plans announced in 2014 to suspend it in the interest of bridging the digital divide across the country.

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The Report: Ghana 2017

Telecoms & IT chapter from The Report: Ghana 2017