A Research and Public Policy think tank, CUTS Ghana, has called on the Ministry of Communications and the National Communications Authority, NCA, to ensure that measures taken to enforce the provisions of the Electronic Communications (EC) Act 2008 and the National Telecommunications Policy in addressing disparities in market and revenue share in the telecom sector, are based on evidence and best practice.
According to them, it could potentially become counterproductive and discourage future investment in the sector.
In a statement issued by CUTS Ghana, the Country Director, Appiah Kusi Adomako, explained that,”whilst some Ghanaians including myself have become concerned about the Scancom MTN’s growing size in terms of market power and dominance, we must understand that the free and liberalized market rewards firms that innovate and invest.”
“MTN has come a long way since the 90’s when it entered the market as Spacefon and has now grown to become the largest share telecom company in terms of market size and industry revenue. Before year 2000, there were three players in the industry in the order of Ghana Telecom, Millicom (Mobitel) and Scancom (MTN). The market dynamics have changed. The question we should ask is how did we get here? What has been the level of investment of these market players?” he said.
According to him, available data suggests that MTN faced with ex-ante risk in Ghana invested and expanded services across the country whilst other market players slowed their rate of expansion including the government of Ghana who is a minority shareholder in Vodafone Ghana.
On the issue of whether it is illegal for a firm to be dominant, Mr. Adomako stated that, “competition (antitrust) regimes all over the world see nothing wrong being a dominant or a monopoly. What is against the law is the abuse of dominant position in the market. In any case, with no competition law in place, is there enough competence in Ghana to investigate abuse of dominance?
“The biggest question is whether MTN gained dominance through disadvantaging rivals or simply because rivals were inefficient. If competitors were inefficient, then the new measures are simply intended to bail out or reward inefficiencies,” he said.
He further noted that, currently under the telecom tower market, there is a merger application between two major players in the industry namely American Tower Corporation and Eaton Towers Ghana Limited. Should this merger application be approved the post-merger share of the merged firms would approach almost 80% of the market share. Competition law enforcement and regulators hardly ever approve such merger.
“Clearly, allowing American and Eaton merger to go through would impair heavily on downstream players in the industry and increase unmerited rent. The existing NCA Act is hamstrung in addressing these issues unfolding in the telecom sector. There is therefore the need to ensure that the draft Competition and Fair-Trade Practices Bill of 2019 gets to Parliament for consideration and its passage to ensure,” he added.
He has therefore urged the regulator to take full look at the whole industry and not just one player, stating that the measures given by the Ministry to correct the market to optimal level should not be issued as orders but be treated as an opportunity to reform the market landscape through good faith, understanding and mutual trust, a win-win for market players and consumers.
Background
On June 8, 2020, the National Communications Authority announced that it is set to begin the implementation of specific measures within the telecommunications industry to provide a level-playing field for all network operators and break the dominance of MTN Ghana in the telecommunications sector.
According to the Authority, government wants to stop the growing control of MTN as it “has impacted negatively on competition and consumer choice, necessitating corrective action” though it acknowledges the investments MTN has made in their operations over the years.
Meanwhile, MTN Ghana says it has not received any formal notification from the National Communications Authority, NCA, on the issue. They however, respect any position taken by the NCA to regulate the telecommunications sector in line with the law and best practice.
