In line with global trends, Ghana’s telecoms operators are looking to data to drive higher average revenue per user, in response to voice revenues either growing slowly or plateauing completely. “Data is becoming an increasingly valuable resource in the Ghanaian techspace,” Mark Addo, CEO of West Blue Consulting, told OBG. “In addition, programmes such as the national ID system highlight the process of digitisation occurring in all areas of society,” he said.
According to the National Communications Authority (NCA), the sector’s regulator, the number of mobile data subscriptions in Ghana totalled 23.5m as of September 2018. This suggested a penetration rate of 80.3%, while 58.8% of mobile subscriptions were data subscriptions.
The market leader in the mobile data segment was MTN, with 13.68m subscribers and a market share of 58.13%. Vodafone was second, with 4.3m subscribers and a market share of 18.2%. Airtel ranked third, with 2.4m and 10.1%, and Tigo fourth, with 2.9m and 10.5%. In October 2017 these latter two merged to form AirtelTigo, which was the second-ranking company in overall mobile data. Glo had the smallest portion of the segment, with 263,000 data subscribers and a share of approximately 1.1%.
“More and more Ghanaians are going online. It’s still on an upward curve,” Gareth Townley, managing director of Eaton Towers Ghana, told OBG. “However, there are issues that hold the development of mobile internet back, including the underdevelopment of mobile money, and the fact that credit cards aren’t widespread.” Furthermore, Ghanaians on limited income are deterred from regularly using data due to the perception that they cannot control expenditure, as the costs of using different applications are more difficult to track than voice usage.
The latest phase of development of the mobile market is the rollout of 4G LTE networks. Until recently, MTN was the only telecoms provider in the country, acquiring an 800-MHz spectrum licence in December 2015. However, other providers like Busy Internet and Surfline supply 4G dongles that have also proven popular. MTN deployed a network of 4G sites countrywide, and was therefore able to offer LTE services on launch to all regions. The LTE service allows for quicker data connections, a factor that is increasingly important as higher numbers of Ghanaians go online for services such as video, streaming, downloading information, voice over internet protocol calls and day-to-day internet browsing. It also helps to free up 3G capacity for users who are not using 4G-enabled devices.
In December 2018 Vodafone Ghana announced that, in a $30m deal with the NCA, it had secured a 2×5 MHz frequency spectrum block in the 800-MHz band. The licence will allow the operator to offer 4G LTE to its Ghanaian subscribers. As of early 2019 the company was actively working to upgrade its network infrastructure for 4G rollout, with investments totalling around $90m.
Vodafone expects to launch 4G by the second quarter of 2019. In September 2018 the NCA had invited bids for three lots of spectrum blocks, but received only two bids – one of which, from energy company Quantum, was worth about $2m.
Having been awarded the licence, Vodafone Ghana will be required to cover at least six metropolitan capitals and 20 other municipal and district capitals within 36 months. Within 48 months, it will need to cover an additional 50 municipal and district capitals, and a further 50 within 60 months. This will entail considerable investments in network infrastructure, as well as marketing, to ensure that there is subscriber take-up of the new network services. This should provide a considerable boost to the ICT sector as a whole.
Furthermore, the expansion of high-speed internet will help social and economic development, and the growth of Ghana’s innovative tech companies, which is sometimes limited by poor connectivity. “Ghana suffers from uneven data distribution, and the quality of life of those unable to access it is comparatively lower,” Samuel Amanor, founder and CEO of financial technology company Blue Space Africa, told OBG. “This lack of internet connection penetration is hindering the digital sector’s ability to scale,” he said.
While just one operator has rolled out 4G as of yet, the market is already preparing for the longer-term introduction of 5G networks. In April 2018 then-CEO of AirtelTigo Roshi Motman called for the NCA to start working towards the acquisition of 5G spectrum, in order to keep pace with the changing global environment around internet and data. According to Motman, the authorities should start the process of discussing 5G acquisition by telcos, as AirtelTigo was already in the process of preparing for 5G spectrum acquisition. Motman also stated that “acquiring 4G is a natural progression”, but emphasised that 5G was superseding 4G fairly rapidly. “I also believe that it is not necessary, as a company, to move from 2G to 3G and then to the next when there is a more developed one out there. You can go straight onto 5G,” she said.
Rather than just an incremental change to internet technology, 5G offers hugely increased capacity, lower latency and faster speeds .
In addition, it is expected to make the internet of things, artificial intelligence and virtual reality faster, smarter and more responsive. The development of 5G may also provide an opportunity for Ghana to refarm some of its existing capacity; it is likely to make slightly older technologies like 3G cheaper, allowing for development in areas that currently are not covered by any form of mobile internet.
“Now that 5G is very much on the horizon, Nokia already has a market for 5G in the US,” Praveen Sadalage, managing director of internet service provider Busy Internet, told OBG. “But 3G will remain relevant for a certain demographic. Older technology tends to go to towers in rural areas, pushed out to the edge, while the new tech comes in the middle,” he said.
The infrastructure investments necessitated by the evolution of 4G networks is providing opportunities for infrastructure companies. “There has been an acceleration of tower building in Ghana, as there has been across Africa,” Townley told OBG. “You need towers to support data volumes.”
Players such as Eaton Towers are becoming increasingly active on the market, as telco companies look to optimise operational over capital expenditure, and as the commercial logic of sharing infrastructure becomes more apparent. The costs of maintaining a tower network, for example, are an unnecessary burden on operators in a competitive environment. For tower companies, towers that serve two or more operators (co-location) is optimum; as more tenants results in higher profit. Regulatory pressure has helped in this regard. According to legislation introduced in 2010, two towers located within 400 metres of one another must be co-located. While co-location makes sense commercially and environmentally, the 400 metre rule is not always welcome. In urban areas, for example, infrastructure may need to be denser.
The challenge of encouraging data take-up goes beyond providing the best technology. As in many emerging economies, Ghana’s telecoms market is price sensitive. The high level of data penetration disguises the fact that many of those with data subscriptions do not use data, or use it very sparingly. A commonly cited example is that of Ghana’s Uber drivers, many of whom accept rides before turning their data service off and driving to their customer. Due to the fact that data continues to be relatively expensive throughout the country.
“Ghana ranks 126th in the world for data affordability,” Daniel Abunu, managing director and co-founder of technology company Viotech, told OBG. “Ghanaians can afford smartphones, but often they can’t afford data.” Abunu says that encouraging subscribers to use more data services will require smart thinking by businesses. An example of this is banks making their apps data free, so that customers can use them without worrying about running down their phone credit, or encountering a large phone bill. Ecobank has been successful in this area, recognising that by subsidising its data services, it can boost broader financial inclusion by making the service accessible to the less affluent, and thereby increase its market share.
Townley sees considerable potential for development and inclusion from financial technology, in particular with mobile money. According to recent government figures, mobile money transactions totalled GHS156bn ($33.7bn) in 2017, up from GHS79bn ($16.4bn) in 2016, while the number of registered mobile money accounts grew by 40% to $30m in June 2017 – a substantial increase from 21.7m the year before. “MTN covers most of the country with data services, including rural areas where there are currently no banks,” Townley said. “Mobile money is a highly beneficial product, and we think it has huge and rising potential. In three to five years, data and mobile money are likely to be major market drivers.”
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