This article could have easily been titled “NCA CREATED THE MONSTER CALLED MTN”. But for specificity, we chose to focus on actual issue – why naming MTN the significant market power (SMP), at the time it was done, was one of the most pretentious and hypocritical regulatory decisions that may never work.
Let me put in a long caveat before I continue.
Often when I write these articles, expressing concerns about how the telecom industry is being managed, it appears as if I am targeting particular industry players, when in fact the focus is on the duty bearers who have superintended over and, in most cases, facilitated the current state of affairs.
A typical example is how the National Communications Authority (NCA) rolled out a well-intended tower co-location policy, which created independent tower companies like ATC Ghana and Helios, and yet it appears that the NCA is not regulating that space in a manner that ensures that the conduct of the towercos helps to sustain the elements of the government’s own local content policy in the industry. As we speak today, all the locally-owned Broadband Wireless Access (BWA) operators have suffocated under heavy tower bills and collapsed, while NCA looked on. So, writing about a matter like that may look like an attack on ATC Ghana, but no.
MTN today is by far the biggest player in the telecoms industry. In fact, I dare say that MTN is far bigger than what the NCA’s periodic industry subscription reports say. The real size of MTN is not in the subscriptions. NCA is fully aware of where the actual size of MTN lies because the NCA is solely responsible for making MTN that big. So, again, an article like this one may appear like an attack on MTN, but that is not the case at all.
MTN, like any other telco would have done, only availed itself of what the NCA allowed in their pursuit of MONEY rather than regulations that inure to the benefit of the entire industry. Any telco with the resources to take advantage of what the regulator allows, would do exactly what MTN did. So, no one can blame MTN at all, not by any stretch of imagination. There is an abiding allegation that telcos engage in regulatory capture to ensure they have insiders within the ranks of the regulatory body who seek their interest. As to whether or not, MTN induced people at NCA to make this kind obscene market imbalance to happen, that is still on the NCA and the greedy people in their midst.
By extension, part of the blame can be put on the government of the day, for whom the NCA is and will always be an implementing agency. So, if the people in government were so greedy and irresponsible as to chase money and forget about the well-being of smaller operators and government’s own local content in the industry, then why should anyone blame MTN or ATC Ghana who are only doing what the NCA and it’s enabling government have so recklessly allowed?
No need to bore anyone with the details of the fact that in June 2020, this government/NCA declared MTN a significant market power on the basis that MTN had become too big and independent of the industry, such that it poses a threat to the sustainability of the entire industry, to put it brief.
Subsequently, NCA has for the past two years been implementing some regulatory intervention to correct what it described as the “market imbalance”.
The manifestations of these interventions include a 30% reduction in asymmetrical interconnect fees MTN is supposed to receive from other telcos every month for two years, a directive to MTN to cancel on-net/off-net price differentials, and another directive to MTN not to have the lowest voice, SMS and data tariffs on the market, among other things. These interventions are clearly designed to deny MTN revenue and put some constrains on them in terms of what they can and cannot do.
Ironically, NCA recently issued a statement to say that the intent of declaring MTN as SMP was not to punish or stifle MTN’s operation, and that MTN can still expand and grow its business in spite of the declaration. NCA has not been able to tell the public how it’s bid to correct the market imbalance with the SMP declaration is faring.
In fact, the last time the NCA’s director-general was asked for evidence of how the declaration is correcting the market imbalance, he pulled up a slide that indicated there is zero impact. MTN is still growing in leaps and bounds, while the intended beneficiaries of the policy are rather losing considerably.
Simply put, NCA’s SMP interventions are not working as intended, and they will probably never work because the same NCA, which is today pretending to be trying to correct the market imbalance, was the very regulator who created the imbalance in a greedy pursuit for easy money rather than growing the entire industry.
Subliminal Message
If you listened to the Minister of Communications and Digitalization, Ursula Owusu-Ekuful at the launch of MTN Ghana’s 25th Anniversary in March 2021, you would notice that, even though it was not in the text, they DELIBERATELY created the monster called MTN so they can use it to drive the entire industry. She urged MTN to use its market position as the SMP to carry the entire ecosystem along the path of growth. You be the judge.
The simple truth is that they are bent on revenue collection more than regulatory strategies that will maintain the local content, expand it further, and grow the entire industry in a more sustainable manner.
They noticed that MTN had money and was the only telco willing and able to spend, so, they created the opportunity to rake in some money from MTN and, in the process, turned MTN into the monster that it is today. Now they have turned round and are shamelessly pretending they are working hard to tame MTN in everybody’s interest, when in fact they know it is all a charade. I dare say that even MTN’s lawsuit against the SMP declaration could have as well been part of that one big charade. I say so because MTN knew very well that they were more than qualified to be an SMP and yet they sent everyone on that needless legal roller coaster.
Secret spectrum sale to MTN
The NCA is known for doing a lot of things in secret and only going public with stuff that suits their, or the sitting government’s propaganda. In their usual secretive fashion, NCA facilitated the sale of even more 4G compliant spectrum to MTN on our blind side, making MTN a genetically modified monster – way bigger and scarier than any industry player could face.
MTN had already proven to NCA that they are willing and able to pay anything for as much spectrum as possible. Indeed, spectrum is the life line of every mainstream telecom operator and internet service provider. A former CEO of MTN once stated that MTN will acquire as much spectrum as is made available in any market. That is the spirit of any telco which knows what it is about.
When NCA, under the auspices of government, decided to sell slots in the 800MHz 4G-compliant spectrum band, they fixed the price at a minimum of $67.5 million for a 2x10MHz frequency-division duplexing (FDD) lot. In the end, only MTN could afford it. All other telcos were completely priced out. A government/regulator interested in the development of the entire industry would have known at that moment that the pricing was wrong and the imbalance in the market was going to get worse. But NCA even did worse by allowing MTN to buy an addition 2x5MHz FDD lot on that same band to increase their stake to 2x15MHz. It is and has always been about money for the NCA and its enabling government.
At the time NCA allowed this disaster to happen, it had, three years prior, given exclusive Broadband Wireless Access (BWA) licenses to some locally-owned companies to start 4G services exclusively on the 2600MHz spectrum band. It was a protectionist policy that excluded the mainstream telecom operators, all of whom were multinationals. There was the need to have some local content in the industry and that policy was the way to ensure that.
Two of the BWAs (Surfline and Blu Telecom) had taken off in parts of Accra and one (Goldkey) reportedly rolled out some infrastructure, and even set a launch date, but never take off. Now, due to the fact that a monster like MTN was thrown into the 4G market, in spite of all the spirited protest from these smaller local players, they began to suffer badly because MTN was able to provide 4G on mobile phones and the BWAs were stack with modems and routers, which is not sustainable in a mobile-biased market like Ghana.
So, the third local player, Goldkey could not launch at all, because it would not have made economic sense, once the NCA had allowed MTN into the space. Eventually, NCA, in its “wisdom” thought the way to cure the inability of Goldkey to launch was to make MTN even bigger by allowing them to purchase Goldkey’s 2x15MHz FDD lot in the 2600MHz spectrum band. Goldkey reportedly offered the spectrum to MTN in exchange for some shares in MTN, and the NCA was happy to approve the deal because it puts money into NCA’s pocket as the supervising regulator.
Sooner than later, Blu Telecom, which had operations only in parts of East Legon at the time, started suffering and got lost on the radar. Then comes NCA again with its money hungry strategy – allow MTN to buy Blu’s 1x30MHz lot in the 2600MHz band. That was a time-division duplexing (TDD) lot.
As if that was not enough, another existing internet service provider (ISP), Zipnet, which later became Broadband Home (BBH), also went into distress because they could not stand competition from the monster created by NCA, and guess what NCA’s solution was – allow BBH to also sell their 1x30MHz TDD spectrum lot to NCA’s pet monster – MTN. So, now MTN holds its own 2x15MHz FDD in the 800MHz band, a 2x15MHz FDD lot in the 2600MHz band and two 1x30MHz TDD lots in the same band. This means that now, MTN alone holds an estimated 75% of the 2600MHz, the very spectrum lot that was deliberately and exclusively reserved for local players.
Imagine the disaster created by the revenue collector of a telecoms regulator, backed by a government with an insatiable crave for easy money, no matter the consequences?!
The SMP Study
Now, in a sleek move by the folks at NCA and their cohorts at the ministry to throw dust into our eyes, they pretended they did not already know that, through their greed for money, they had created a monster in the industry. So, they embarked on a charade by using public funds to engage an industry researcher (most likely a crony) to conduct a study to confirm whether the conditions exist for MTN to be named an SMP. That exercise turned out to be a complete waste of time and money for two reasons. Firstly, NCA knew the conditions existed even long before they allowed MTN to buy more spectrum from the BWAs. Secondly, even after the study report was given to them, they sat on it for about two more years. A complete waste.
So, here we are with a regulator pretending that the monster it so irresponsibly and recklessly created, only appeared on its blind side and took everybody by surprise in 2020. NCA declared MTN SMP in June 2020. Just a year before then, MTN was allowed to acquire the Goldkey spectrum. Then in the post-SMP era, between 2022 and this year, they closed the deals for the Blu and BBH spectra purchases. That is how reckless this regulator and government have been in creating the monster called MTN. Even after naming MTN SMP, they still allowed them to buy two more spectrum slots. Unbelievable.
Surfline/MTN partnership request
Now Surfline wants to partner with MTN to deploy its 2x15MHz FDD lot in the 2600MHz nationwide on MTN’s infrastructure. Suddenly, government has pretentiously mounted a moral high horse – it does not want to allow MTN to have access to any more spectrum because it is an SMP. I bet if Surfline had joined the queue earlier to sell its spectrum to MTN, NCA would have approved of the sale one time, without blinking, because it would have put money into NCA’s pocket. Well, I am told NCA has given its blessing to the partnership request, but the Minister is the one standing in the way of it.
I am convinced beyond every iota of doubt that the industry regulator and the ministry are preoccupied with collecting revenue from the industry more than pursuing regulatory strategies and policies that ensure proper growth of the industry in a manner that protects consumers.
Two years have passed, since NCA started implementing their SMP regulatory interventions on MTN. Apart from some cosmetic effect of saving the other telcos some GHS86.6 million they would have paid to MTN over that two-year period, there is absolutely nothing else to show as evidence of those interventions helping to correct the market imbalance it set out to correct. As stated earlier, it was a shame for the NCA boss to have rather displayed data that showed that between December 2019 and February 2023, MTN has increased market share from 55% to 67%, while Vodafone lost four percentage points, AT lost six percentage points and Glo grinded to zero over the same period.
Meanwhile, three BWAs, as stated earlier, have sold out to MTN, while two of the remaining three have recently been rendered non-operational and one is in distress. AT and Vodafone are heavily indebted to their partners. Vodafone later managed to acquire some 2x5MHz lot on the 800MHz band at one point, and improved to 2x10MHz later on. But it is now too later for it to catch up with MTN based on the volume of spectrum MTN has now.
Objectively speaking, SMP declaration may be the key condition for a solution to the mess created by the NCA. But given the fact that this NCA under the auspices of the sitting government DELIBERATELY created the problem, I doubt if they are even honest about fixing it and whether they can fix it at all. Now MTN has become something totally different from the regular telco NCA is seeking to tame. One and only one entity can be blamed for all this – the National Communications Authority with the backing of the Ministry of Communications and Digitalization.
In Ghana, people are usually appointed to institutions like NCA as a reward for political loyalty or something of that sort. Maybe, it is time we took a second look at the motivation for such appointments, if we really want to see proper regulation that inures to public interest rather than the selfish interest of some political authority.
Let me rest here.
