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MTN declared to have Significant Market Power, saving smaller telecoms GH86.6m

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In the last two years, the smaller Mobile Network Operators (MNOs) have saved a total of GH86.6 million as a result of MTN Ghana’s designation as a Significant Market Power (SMP) in the country’s telecommunications industry.

The SMP was supposed, among many other things, to provide a fair playing field and limit the power of the corporation to manipulate its tariffs, regulate its profit margin and maybe its ability to add hurdles to possible new entries or smaller participants in the market.

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The industry’s non-SMP players saved money, which allowed Vodafone Ghana, now Telecel, the country’s second-largest telco, to earn GH50.4 million, or 58 percent of the savings.

AirtelTigo, the third-largest company in the sector, saved GH34.8 million, or 40% of the total savings, while Glo Ghana saved GH1.6 million, or 2% of the overall savings.

The National Communications Authority (NCA), the industry regulator, estimates that between October 2020 and December 2022, asymmetric interconnection revenue savings per non-SMP were realised.

MTN’s hegemony
Given its size and sway over the nation’s telecoms market, MTN Ghana was designated as an SMP by the NCA.

The telecom giant then carried out the NCA’s instruction regarding phase 1 of the elimination of the on-net/off-net price differential on default phone, data, and SMS tariffs on August 1, 2021.

On-net versus off-net differences
The elimination of on-net and off-net price differentials was one of the conditions for the SMP’s introduction, among other factors.

For instance, it meant that the call and SMS prices between MTN-to-MTN communications and communications from an MTN number to any number on the other networks should be the same.

In order to give their customers more value when communicating with one another on the same network, telcos frequently offer lower on-net rates via a variety of bundles and promotions.

With a market share of almost 60% and continued growth over the years, MTN Ghana has been able to use this strategy to outsmart its rivals and become the largest company in the sector.

Making the inequities right
Following MTN Ghana’s designation as an SMP, NCA proposed many measures to address market inequities in the telecom sector, including: Implementation of 30% asymmetrical interconnect charges for two years, subject to market reaction, in favour of the underprivileged operators — as required by law; Set floor and ceiling prices for services like voice, data, SMS, and mobile money; review and approve all pricing by MTN in accordance with legal requirements.

Additionally, MTN must ensure that different operator vendors are not subject to exclusionary pricing or behaviour, refrain from charging different charges for on-net and off-net transactions, and make sure that MTN’s access to information does not harm any Value-Added Services provided by non-SMP operators.

explains NCA
However, it is unclear whether the non-SMP networks have invested the savings back into their operations to improve their network service and increase their market share over time, allowing the majority of Ghanaians to also primarily benefit from lower pricing.

In response to a question about whether non-SMP players were investing or reinvesting their savings to catch up, Mr. Joe Anokye, Director-General of the NCA, said: “One SMP requirement was that smaller firms should reinvest the savings from the imbalance that flows directly into infrastructure, but there is no proof of that.

But he also said that the NCA does not definitively dictate to the lesser players what they should do with their savings.

The NCA boss acknowledged that the nature of the business required significant capital investment and enormous liquidity to function without hiccups, which suggested that the savings might have been applied to strengthening their liquidity position.

Up to date
Mr. Anokye responded to the question of if they are all motivated to overtake the market’s preeminent leader, MTN, by saying that the market has been extremely competitive and “I am pretty sure they want to compete and I believe MTN also does not want to become a monopoly.

They probably also want to make sure that the market is impartial. National roaming is a component of the solution.

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