BMI Ghana Telecommunications Report Q3 2013[1] 22145049
Transcript of BMI Ghana Telecommunications Report Q3 2013[1] 22145049
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Q3 2013www.businessmonitor.com
GHANA TELECOMMUNICATIONS REPORT
INCLUDES 5-YEAR FORECASTS TO 2017
ISSN 2041-6679Published by:Business Monitor International
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Ghana Telecommunications
Report Q3 2013INCLUDES 5-YEAR FORECASTS TO 2017
Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: June 2013
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CONTENTS
BMI Industry View ............................................................................................................... 7
BMI Industry View . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 7
SWOT .................................................................................................................................... 9
Mobile . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 9
SWOT ................................................................................................................................................... 11
Politics .................................................................................................................................................. 13
Economic .. .. ........................................................................................................................................... 15
Business Envir onment .............................................................................................................................. 16
Industry Forecast .............................................................................................................. 18 Mobile . .. .. .. .. .......................................................................................................................................... 18
Table: Telecoms Sector - Mobile - Historical Data & Forecast ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARPU . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 20
Table: Telecoms Sector - ARPU - Historical Data & Forecast .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Fixed Line .............................................................................................................................................. 21
Table: Telecoms Sector - Fixed Line - Historical Data & Forecast .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 21
Broadband .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 22
Table: Telecoms Sector - Internet - Historical Data & Forecast .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Industry Business Environment Overview ...................................................................... 25
Sub-Saharan Africa Risk/Reward Ratings .... ........ ......... ........ ........ ........ ........ ......... ........ ........ ........ ......... ...... 25Table: Sub-Saharan Africa Industry Risk/Reward Ratings, Q313 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Ghana Risk/Reward Ratings ...................................................................................................................... 29
Market Overview ............................................................................................................... 31
Mobile . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 31
Regional Perspective .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 31
Table: Ghana Mobile Market Regional Comparison, 2012 .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Key Developments ........ ......... ........ ........ ........ ......... ........ ........ ........ ........ ......... ........ ........ ........ ......... ...... 32
Market Growth .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 33
Table: Ghana Mobile Market ( '000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Market Share .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 35
Usage .................................................................................................................................................. 37
Networks .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 38
Table: Comparison Of 3G Pricing, May 2013 . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 40
Content ................................................................................................................................................ 41
Mobile Operator Data ............................................................................................................................ 45
Table: Market Overview . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 45
Table: MTN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 45
Table: Vodafone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Table: Tigo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 46
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Table: Airtel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Table: Glo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Table: Expresso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Mobile Content .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 48
Non-Voice Revenue Contribution Head Into Double Digits .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 48
Diversity Of Services .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 50
Mobile Crossovers Still In The Mix .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 51
M2M Debuts In Africa .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 52
Fixed Line .............................................................................................................................................. 53
Table: Ghana Fi xed-Line Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Broadband ............................................................................................................................................. 55
Table: Wireline Developments Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Industry Trends And Developments ................................................................................ 61
Table: Mobile Market Trends And Developments ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Table: Value-Added Services Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Regulatory Development .................................................................................................. 64
Regulatory Overview .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 64
Table: Ghana's Regulatory Bodies And Their Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Regulatory Developments ........................................................................................................................ 66
Competitive Landscape .................................................................................................... 69
Table: Key Pla yers - Ghana Telecoms Sec tor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Table: Operators Financial Ind ica tors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Company Profiles .............................................................................................................. 70
Vodafone Ghana ..................................................................................................................................... 70
MTN Ghana ........................................................................................................................................... 74
Regional Overview ............................................................................................................ 78
Regional Overview ... .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 78
Background .......................................................................................................................................... 79
2012 Achievements ......... ........ ........ ........ ......... ........ ........ ........ ......... ........ ........ ........ ........ ......... ........ ..... 79
Financial Results ................................................................................................................................... 81
Table: Avanti C ommunications Group Results (GBP '000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Demographic Forecast ..................................................................................................... 82
Table: Ghana's Population By Age Grou p, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Table: Ghana's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Table: Ghana's Key Population Ratios, 1990-2020 ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Table: Ghana's Rural and Urban Population, 1990-2020 .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Glossary ............................................................ ................................................................. 86
Table: Glossary Of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Methodology ...................................................................................................................... 88
Table: Key Indicators For Telecommunications Industry Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Telecoms Business Environment Ratings ........ ........ ......... ........ ........ ........ ......... ........ ........ ........ ........ ......... .. 89
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Table: Ratings Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
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BMI Industry View
BMI Industry View
BMI View: Although mobile penetration crossed the 100% mark in the end of 2012, the market continued
to show considerable growth in Q113. Increasing mobile substitution continued to apply downward
pressure on the fixed-line connections, which showed slow and erratic growth in the first quarter of
2013. Strong uptake of data services in Q113 support our continued view that increased data usage will
drive growth in the telecoms sector over our forecast period to 2017. Outperformance of this sector will be
underpinned by ongoing investment in the extension of network coverage to underserved areas, improved
submarine cable connections, which will lower prices, and increasing availability of affordable 3G-enabled
devices.
Key Data
■ The Ghanaian mobile market grew by 3.3% q-o-q in Q113, up from 2.9% q-o-q in Q412.
■ Mobile ARPU contracted by 3.3% in Q113, reflecting continued fierce competition as Glo Ghana enters
its second year of operation in the mobile market.
■ The fixed-line market grew by 1% in Q113, maintaining the overall trend from 2012 of slow positive
subscriptions growth in the fixed-line sector.
Risk/ Reward Ratings
Ghana remains in fifth position on BMI's Risk/Reward ratings table this quarter, behind Nigeria, South
Africa, Gabon and Angola, despite a five-point increase in its industry rewards rating, due to increased
connectivity and uptake of data services. Ghana scores above the regional average in all four of our ratings
categories.
Key Trends And Developments
Ghana's operators continue to invest in improving their networks and broadband connectivity throughout
the country. MTN Ghana announced plans to invest around US$105mn upgrading and expanding its
network this year. The subsidiary of MTN Group is understood to be part of the investment that has been
reserved for a national fibre-optic cable and also for a metro fibre cable in Kumasi, Ghana to enhance data
services. MTN Ghana will also deploy 3G base stations and roll out 200 2G sites. Expresso, Ghana's
smallest operator, has announced plans to launch high-speed broadband services as its link to the African
Coast to Europe (ACE) submarine cable went live in May 2013. It is the last operator to gain access to a
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submarine cable, and it will use its improved competitive position to try and boost its market share, which
was less than 1% in March 2013.
These developments are paralleled by strong growth in the data sector, according to results on the mobile
data market for Q113 published by the National Communication Authority (NCA). The data showed
that 34.5% of mobile subscribers also use data services, and MTN has the lion's share of the market with
65%. The rest of the data market is split between Tigo, with a 14% share; Airtel with 10%; Vodafone with
7%; Glo with 3%; and finally Expresso with a 1% share.
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SWOT
Mobile
SWOT Analysis
Strengths ■ Relatively strong subscriber growth continues, despite penetration having surpassed
the 100% mark at the end of 2012.
■ Regulatory regime is widely praised for its licensing procedure and clarity.
■
Vibrant competition, with six active mobile networks.
■ Sector plays host to several major international players, including South Africa's MTN,
India's Bharti Airtel, Luxembourg's Millicom and Vodafone of the UK.
Weaknesses ■ MTN still overly dominant in the market, with a voice market share of more than 45%
a data market share of 65% at the end of March 2013.
■ The sector continues to suffer from quality of service issues.
■ Market remains skewered towards lower spending prepaid users; this contributes to
low levels of ARPU.
■ Although ARPU has appeared fairly steady, and not as low as some markets in Africa,
it is still low and continues to experience downward pressure as new operators vie to
gain market share.
■ Price competition among operators in the prepaid sector could encourage further
growth of the prepaid market leading to lower ARPUs
Opportunities ■
There is considerable scope for expanding networks into underserved parts of thecountry while, at the same time, improving the resilience of existing infrastructure.
■ As all operators have now have access to one or more submarine cables, there are
many more opportunities to offer advanced data services.
■ Ghana has a potentially large market for value-added services (VAS), if operators can
find the right way to tap it. Recent service launches by MTN, Airtel and Vodafone have
introduced mobile commerce and payments services to the country.
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SWOT Analysis - Continued
Threats ■ The commercial launch of sixth operator Globacom in April 2012 has increased
downward pressure on mobile ARPU.
■ Although it can be beneficial for subscribers, new competition increases the
possibility of a price war, which can damage operators in the long run.
■ The growth of the larger GSM operators could continue to threaten the survival of
smaller operator Expresso Telecom (Kasapa).
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SWOT
SWOT Analysis
Strengths ■ Ghana has adopted a universal licensing scheme, which effectively means that all
those licensed to offer mobile services and mobile infrastructure can also move into
the fixed-line sector. This is likely to encourage investment, especially in the fixed-
wireless segment.
■ Limited competition exists in the fixed-line sector, with Airtel holding some small
fixed-line assets.
■ Competition exists in the internet access sector, where there are many licensed ISPs,
although only a handful of them are believed to be active.
■ The presence of Vodafone as a major international investor in the fixed-line market is
a plus. Vodafone has been doubted in the fixed-line sector so it is making great
efforts to prove itself.
Weaknesses ■ Fixed-line infrastructure is very limited.
■ Because mobile services have taken off so markedly, growth in the fixed-line sector
has recently stagnated.
■ Internet usage levels remain relatively low with penetration estimated at 17.8% at the
end of 2012.
■ Broadband services are still a long way beyond the means of most ordinary people;
penetration is estimated at just 1.4% at the end of 2012.
■
Ghana Telecom's National Communications Backbone Company has a monopolyover the provision of national bandwidth.
■ The incumbent's monopoly over fixed network infrastructure limits the prospects of
investments in fixed next generation access networks.
Opportunities ■ Potential to issue additional licences for the construction of competing national
infrastructures; this would help to undermine the monopoly of NCBC and the
potentially harmful effects of having limited competition.
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SWOT Analysis - Continued
■ The focus of much of the recent fixed-line investment has been on providing public
services so that more people will start to have access to communications services
through facilities like phone booths.
■ The award of broadband wireless access (BWA) licences offer significant
opportunities for expansion for voice and broadband internet services.
■ New live connections to submarine cables have increased Ghana's total broadband
capacity to 12.12Tbps; this will bring down prices, which should in turn help the
growth in the number of broadband subscriptions.
Threats ■ The growth of mobile broadband services could negatively affect the growth of fixed
broadband services such as ADSL and WiMAX.
■ Short- to medium-term danger that broadband prices may not fall far enough to make
such services accessible to ordinary Ghanaians.
■ Increased incidence of cable cuts threatens fixed network expansion to across the
country.
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Politics
SWOT Analysis
Strengths ■ Ghana is widely regarded as a rapidly maturing African democracy, with peaceful
elections and transitions of power since the multi-party system was introduced in
1992.
■ The constitution prevents undue power concentration in any one ethnic or religious
group.
■ A free media climate has stimulated open and lively debate and aided the
democratisation process.
■ Relatively strong ethnic cohesion, in large part due to the tradition of secondary
boarding schools that mix children from all ethnic groups, has helped keep tensions -
common elsewhere in Africa - at bay.
■ Ghana's participation in many peacekeeping missions across the continent has
bolstered its image as a pan-African role model.
■ Ghanaians residing abroad are likely to inject a fresh external dynamic to domestic
politics, after the passage of the Representation of the People's Amendment Bill,
giving them the right to vote in national elections.
Weaknesses ■ Corruption is still a concern, both in the private and public arena.
■ The institutional architecture remains relatively weak, impeding the effective execution
of policy.
■ Intra- and inter-party squabbling is common and is an impediment to constructive
debate.
Opportunities ■ Oil revenues could be used by the authorities to redistribute wealth among the
populace.
■ Ghana could strengthen its institutional structures and accelerate the decentralisation
of power.
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SWOT Analysis - Continued
■ Greater stimulus for a civil society, with more intense monitoring of incumbents also
adding to greater transparency.
Threats ■ There could be potential spillover effects (such as refugee inflows) from neighbouring
Côte d'Ivoire in instability erupts again.
■ Rife poverty and health problems (HIV/AIDS and ongoing problems such as the
waterborne Guinea worm disease) remain a threat.
■ An inability to close the developmental rift between the north and the south (urban
and rural areas) could lead to heightened tensions.
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Economic
SWOT Analysis
Strengths ■ Ghana's natural resource riches are a boon in times of elevated commodity prices,
and there is scope to ramp up output further.
■ Multilateral debt relief has reduced Ghana's external liabilities significantly, freeing up
erstwhile debt servicing funds for pro-poor spending and deepened developmental
efforts.
Weaknesses ■ An overwhelming dependence on the agricultural sector makes the country vulnerable
to unpredictable weather forces.
■ The large informal sector eludes the government coffers' official statistics.
■ Ghana's narrow export portfolio, predominantly cocoa, oil and gold, exposes the
country to the vagaries of the commodity markets.
■ Heavy reliance on donor funds and poor revenue collection capacity are a strain on
government finances.
Opportunities ■ A more aggressive pursuit of structural reforms and further consolidation of
macroeconomic stability would help Ghana.
■ Domestic oil production should reduce reliance on oil imports over the long term.
■ The country's tourism potential could be tapped more aggressively.
■ Deepening the domestic capital markets - through the issuance of longer-dated
government bonds, for example - would facilitate private-sector access to credit.
Threats ■ Excessive government spending in 2012 derailed the drive towards fiscal
consolidation and led to the accumulation of a costly debt burden.
■ Any halt in aid inflows or the drying up of remittances from the Ghanaian Diaspora
would dent the outlook for the economy.
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Business Environment
SWOT Analysis
Strengths ■ The absence of deep domestic tensions and political stability in an otherwise volatile
region means that the security risks are comparatively subdued.
■ The authorities have shown a commitment to offering better protection of intellectual
property rights.
■ A proactive reform drive, reflecting the pro-business ethos of the current
administration, has reduced red tape.
■ Ghana is a member of the Economic Community of West African States, with a
market of some 250mn people.
Weaknesses ■ Corruption remains a problem, as reflected in Ghana's ranking in Transparency
International's 2012 Corruption Perceptions Index (64th out of 176 countries).
■ While constitutionally independent, the judiciary remains inefficient, which is reflected
by the interest in alternative dispute resolution avenues.
■ Rudimentary infrastructure, still relatively poor information and communication
technology penetration, and a fickle energy supply pose difficulties.
■ Bureaucratic obstacles and red tape still impede business activity.
■ The labour market is broadly unskilled and relatively inflexible.
Opportunities ■ Consolidating the independence and integrity of the judiciary would enhance the
effectiveness of the court system.
■ Shoring up the domestic banking sector further would bring the broader financial
sector in line with international best practices.
■ Enhancing communications infrastructure would give wider access to information
technology and accelerate the spread of mobile telephony.
■ Mitigating energy shortages would aid business activity.
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SWOT Analysis - Continued
Threats ■ There is a risk of tax rises to prop up government revenue streams given the
perennially weak fiscal position.
■ A resurgence of macroeconomic instability could raise the cost of borrowing.
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Industry Forecast
Mobile
Table: Telecoms Sector - Mobile - Historical Data & Forecast
2010 2011 2012 2013f 2014f 2015f 2016f 2017f
No. of mobile phone subscribers ('000) 17,437 21,166 25,618 28,820 31,299 32,832 33,850 34,730
No. of mobile phone subscribers/100 fixed linesubscribers 6,275 7,434 8,989 10,309 11,252 11,791 12,072 12,325
No. of mobile phone subscribers/100inhabitants 71.5 84.8 100.3 110.3 117.1 120.2 121.3 121.8
No. of 3G phone subscribers ('000) 346 680 1,250 2,063 2,995 4,183 5,448 6,750
3G market as % of entire mobile market 2.0 3.2 4.9 7.2 9.6 12.7 16.1 19.4
f = BMI forecast. Source: BMI
The Ghanaian mobile market grew by 3.3% q-o-q in
Q113, with 844,000 net additions, to reach
26.462mn subscribers, according to regulatory data.
This was a continuation of the impressive growth
recorded in 2011 and 2012, and slightly better than
2.9% q-o-q growth in Q412. The market finished
Q113 with a penetration rate of 101.3%, up from
84.8% in March 2012 and 100.3% last quarter.
Although we expect there is still a fair amount of
growth potential in the Ghanaian market, the pace of
growth has slowed down in the last two quarters
since the market reached the 100% penetration mark.
The market continues to be boosted by promotional
activities, a trend observed throughout 2011 and
2012. BMI notes that the country's operators
adopted this strategy to encourage existing and new
subscribers to register their lines during the mandatory SIM registration exercise. We expect promotional
activities to continue in 2013 and beyond, largely driven by an increase in competition in the mobile market
following the launch of commercial voice and data services by sixth licensee Globacom Ghana in April
Industry Forecast - Mobile
2010-2017
No. of mobile phone subscribers ('000) (LHS)
No. of 3G & 4G phone subscribers ('000) (LHS)No. of mobile phone subscribers/100 inhabitants (RHS)
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3 f
2 0 1 4 f
2 0 1 5 f
2 0 1 6 f
2 0 1 7 f
0
20,000
40,000
100
75
f = BMI forecast. Source: BMI
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2012, and Expresso's connection to the ACE submarine cable in May 2013. We expect these developments
to increase downward pressure on mobile tariffs, especially with the market penetration rate now above the
100% mark.
Our mobile forecast remains unchanged since last quarter and envisages growth to slow down significantly
in 2013 compared to the two previous years. Our view is based on the likelihood of inactive SIM
discounting considering that Ghana has fully implemented the mandatory SIM registration exercise and will
require operators disconnect inactive SIMs on a regular basis. We expect the number of mobile subscribers
to reach 28.8mn by the end of 2013 and 34.7mn by 2017. We also forecast the mobile penetration rate to
rise from 100.3% in 2012 to around 122% by 2017.
Ghana's 3G market is becoming increasingly competitive with five of the country's mobile operators -
MTN, Vodafone, Airtel, Tigo and Expresso - investing considerable resources to upgrade and expand their
3G networks during 2012. We believe this move is partly driven by the rising demand for broadband
services, especially over mobile networks, and the arrival of Globacom, which claims to have built the
country's biggest and fastest mobile data network for its operations.
We expect the arrival of submarine cables Main One, WACS, GLO-1 and ACE, along with the increasing
availability of low-cost data enabled handsets, to drive the uptake of 3G services. Although the National
Communications Authority (NCA) published figures stating there were a total of 8.9mn data subscribers in
Ghana in March 2012, because of differing definitions, BMI maintains its much more conservative estimate
1.25mn 3G subscribers in 2012 and 2.06mn in 2013. While the NCA is understood to include basic 2G
mobile data users in its figures, BMI's figures only include advanced 3G mobile phone users.
Meanwhile, limited fixed broadband infrastructure means more users are likely to access the internet using
mobile devices and USB-based internet dongles. BMI expects these factors to boost 3G subscriptions over
the next five years. We have not adjusted our 3G figured this quarter, maintaining our forecast of around
6.75mn 3G subscribers in 2017, equivalent to 19.4% of the total mobile subscriber base. We believe 3G
services will play an increasingly important role in the competitive landscape as operators aim to diversify
revenue away from basic voice and messaging services.
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ARPU
Table: Telecoms Sector - ARPU - Historical Data & Forecast
2010 2011 2012 2013f 2014f 2015f 2016f 2017f
Market Average ARPU(GHS) 9 7.6 6.0 5.5 5.3 5.1 5.1 5.1
MTN (GHS) 10.1 9.8 7.8 7.1 6.7 6.4 6.3 6.2
f = BMI forecast. Source: BMI
The BMI ARPU forecast is based on the weightedaverage of monthly ARPUs published by mobile
operators. In Ghana, MTN Ghana is the only
operator that publishes regular updates of its ARPU
figures. The latest available ARPU figures for Airtel
Ghana and Tigo Ghana relate to December 2009
and December 2010 respectively. Our overall ARPU
forecast is therefore based on actual ARPU data
from MTN and estimates for the other operator
based on their historical ARPU data. There are no
available ARPU figures for Vodafone Ghana,
Globacom and Expresso.
Using the latest data from MTN, BMI calculates
monthly blended ARPU in Ghana's mobile market
was GHS6 at the end of December 2012, from
GHS7.6 at the end of 2011. Competition in Ghana's
mobile market intensified in April 2012 with the launch of commercial operations by the country's sixth
network operator Globacom. This accelerated ARPU erosion in the country, which has been driven in the
last few years by price competition and promotional offers.
MTN reported ARPU of US$5.9 in Q113, down slightly from US$6.1 at the end of Q412. MTN's
continuing decline in ARPU levels coincides with our forecast for 2013. . BMI believes MTN has the
highest ARPU rate in Ghana partly because of its wide range of value-added services, including mobile
payments. We expect its main rivals to expand their VAS portfolio to drive revenue growth amid declining
Industry Forecast - ARPU (GHS)
2010-2017
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3 f
2 0 1 4 f
2 0 1 5 f
2 0 1 6 f
2 0 1 7 f
0
2.5
5
7.5
10
f = BMI forecast. Source: BMI
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voice revenue. Although such higher value services could help stabilise ARPU, we caution that the possible
launch of commercial services by the sixth licence holder Globacom, poses downside risk to mobile ARPU
growth in Ghana. We expect overall monthly blended ARPU to reach GHS5.1 by 2015 and to remain
constant between then and 2017.
Fixed Line
Table: Telecoms Sector - Fixed Line - Historical Data & Forecast
2010 2011 2012 2013f 2014f 2015f 2016f 2017f
No. of main telephone lines ('000) 277.9 284.7 285.0 279.6 278.2 278.4 280.4 281.8
No. of main telephone lines/100
inhabitants 1.1 1.1 1.1 1.1 1.0 1.0 1.0 1.0
f = BMI forecast. Source: BMI
Ghana's fixed-line market grew by 1% q-o-q in
Q113 reaching a total of 287,909 subscribers,
according to data from the National
Communications Authority (NCA). Although this
was slower than the 3.7% q-o-q in Q412, it is in line
with 0.9% y-o-y growth at the end of December
2012 and a good performance in view of continued
downward pressure on fixed-line subscriptions,
especially from fixed-to-mobile substitution. We
retain our view of declining fixed-line connections
over our forecast period, through to 2017, as demand
wanes over strong mobile voice and data uptick and
limited investment in network infrastructure
development.
Ghana's fixed-line penetration was 1.1% at the end
of March 2013, unchanged from December 2012 and
December 2011, when there were 284,981 and 284,721 active fixed-lines in the country. The market's
growth of just 0.9% in 2012, compared to growth of 2.4% during 2011 and 3.9% in 2010, is in line with our
view that sustained growth is not likely. Meanwhile, subscriber numbers have continued to fluctuate in the
Industry Forecast - Fixed Line
2010-2017
No. of main telephone lines in service ('000) (LHS)
No. of main telephone lines/100 Inhabitants (RHS)
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3 f
2 0 1 4 f
2 0 1 5 f
2 0 1 6 f
2 0 1 7 f
0
100
200
300
0.5
0.75
1
1.25
1.5
f = BMI forecast. Source: BMI
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first three months of 2013, making it difficult to identify a growth pattern and forecast future
performance. Despite a small amount of growth in Q113, we maintain our expectation that the market will
decline in 2013 and largely remain flat over our forecast period. By 2017 we expect 281,800 subscribers,
equivalent to a penetration rate of around 1.0%.
We once again emphasise that we are cautious when forecasting the way in which Ghana's fixed-line market
will develop, considering the continued fluctuation in subscriber figures, for which the regulator and
operators have not provided any explanations. Over the next few years, we expect the fixed-line sector to
continue to largely remain flat. It should be remembered that because mobile telephony is becoming a mass
market commodity, there is an increased likelihood that mobile substitution will become a stronger force for
Ghana's fixed-line market to contend with.
BMI believes the continued growth of Ghana's fixed-line sector over the next few years will depend on
multiple factors. These include the extent to which Vodafone Ghana can move forward with more of its
modernisation plan. Continued growth will also depend on whether the market sees the arrival of new
competition and the deployment of new fixed-wireless technologies. Meanwhile, we expect operators to
focus on business customers in the future to take advantage of the growing demand for corporate telecoms
services in Ghana.
Broadband
Table: Telecoms Sector - Internet - Historical Data & Forecast
2010 2011 2012 2013f 2014f 2015f 2016f 2017f
No. of internet users ('000) 2,032 3,251 4,550 5,556 6,400 7,083 7,713 7,986
No. of internet users/100 inhabitants 8.3 13 17.8 21.3 24.0 25.9 27.6 28.0
No. of broadband internet subscribers ('000) 107 250 350 509 707 908 1,136 1,384
No. of broadband internet subscribers/100inhabitants 0.4 1.0 1.4 1.9 2.6 3.3 4.1 4.9
f = BMI forecast. Source: BMI
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Ghana's internet sector has significant growth
potential in view of the growing demand for
advanced data services in the country. At the time of
writing, there were no new data available on the
broadband sector. By the end of 2012, the sector had
largely underperformed the mobile sector, with
broadband penetration at just 1.4% compared to
mobile penetration of 100.3%. We have highlighted
some of the factors limiting the sector in our
previous reports, including lack of competition in the
wireline sector and very expensive international
bandwidth. However, Ghana's connections to
international bandwidth on submarine cable systems
have improved drastically since 2011, which we
believe bodes well for the uptake of broadband
services over our forecast period, ending in 2017.
We have not changed our forecast since Q213, and maintain our expectation that there will be around 5.6mn
regular internet users at the end of 2013, a penetration rate of 21.3%. This is based on the increasing use of
mobile access technologies, and continued intense competition in the mobile sector as the sixth mobile
licensee Glo Ghana began its second year of business and Expresso's connection to the African Coast to
Europe (ACE) submarine cable went live in Q213. By the end of 2017, we expect the number of internet
users to have risen to 8mn, or 28% of the population.
Based on our estimates, the broadband sector grew by more than 130% during 2011. We attribute this
growth, albeit from a low base, to increasing competition in the internet sector. However, the low
broadband penetration rate implies that most of the country's internet users access the internet using public
sites, including offices, schools and internet cafes.
We believe the prospects exist for strong broadband user growth over the next few years. In addition to
internet cafés, we expect the imminent arrival of many low cost smartphones options on the African market
to drive growth of internet access through wireless broadband networks. Meanwhile, the Ghanaian
government is pushing ahead with a computerisation programme, which could see around 560,000 laptops
distributed to schools and research institutions by the end of 2013. We also expect this to boost the take-up
Industry Forecast - Internet
2010-2017
No. of internet users ('000) (LHS)
No. of broadband internet subscribers ('000) (LHS)
No. of broadband internet subscribers/100 inhabitants (RHS)
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3 f
2 0 1 4 f
2 0 1 5 f
2 0 1 6 f
2 0 1 7 f
0
5,000
10,000
0
2.5
5
7.5
f = BMI forecast. Source: BMI
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of broadband services in the country. Our revised forecast envisages broadband subscription of around
1.384mn by 2017, equivalent to a penetration rate of 4.9%.
Our broadband subscriber forecast takes into account the impact which mobile broadband services are
having on the sector. Meanwhile, the spread of mobile broadband services is also stimulating a rise in
internet usage levels. Mobile broadband services connect to the internet wirelessly though a high-speed (3G/
HSPA) network and are accessible from a wide range of devices, including 3G-enabled mobile phones,
netbooks, smartphones and USB sticks.
We believe operators will continue to promote their mobile broadband services, coupled with the launch of
several undersea cables extending along the West African coastline to gradually lower the wholesale and
retail cost of international bandwidth and fuel subscriber growth for the remainder of our forecast period to
2017.
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Angola now has the highest industry rewards score
in the region, and, by virtue of an increase to
industry risks, it moves into third place at the
expense of Gabon. Similar to Nigeria, Angola has a
low penetration of about 70%, and our outlook for
the next five years forecasts a CAGR of 22.6%. The
state's influence on the main two operators is still a
concern. However, the reduction of interest stakes
and a desire to expand LTE and broadband to
underserved areas has led BMI to upgrade its
industry risks score by 10 points.
Other countries that saw increases to industry risks
scores include Cameroon (10 points), Kenya (10),
Mauritius (10), Uganda (5) and Tanzania (5). In
Cameroon, this was due to the issuance of a third
mobile network licence to Vietnamese operator
Viettel, breaking the MTN-Orange duopoly. The duopoly has stunted market growth, through
uncompetitive pricing and limited network coverage, so the entrance of Viettel will add a new dynamic to
the market. In Kenya, the government has made moves to becoming a knowledge-based economy,
launching its new ICT master plan in February 2013, the main goal of which is to connect every Kenyan
citizen to the internet. The plan has had an immediate effect, starting up the process of digital switchover for
terrestrial television, to be completed before the end of the year. Smaller increases of five points were seen
in Uganda and Tanzania, the latter of which introduced regulations aimed at improving the oversight of
mobile payment services. We believe this will instil security and confidence in the market, as well as define
the boundaries between traditional banking sectors and mobile payment service providers. Meanwhile, the
Ugandan regulatory authority, UCC, has been active in encouraging network sharing to reduce costs,
resulting in a partnership for satellite broadband services between operators Yahsat and TruIT. These
industry risk increases demonstrate the wide-range of options available to regulators and governments to
improve competition and universal access in the market, improving the environment for operators and
consumers.
There has been some movement at the bottom of the table, as Mali has improved its industry rewards score
by 12.5 points, moving it up from 25th to 22nd in our rankings. This places it ahead of Sudan and South
Sub-Saharan Africa ARPU
ARPU (US$), Q313
Souce: BMI
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Sudan, both of which were unchanged in any category during the quarter, and Ethiopia, which has increased
its industry rewards score by 2.5 as a result of the changing forecast periods. Burundi remains rooted to the
bottom of the table, despite low penetration and a competitive environment. Instead, low income levels, low
urbanisation and limited investment are resulting in slow growth, and ARPUs of only US$3, one of the
lowest in the region. Mali's 12.5-point improvement allows it to leapfrog these countries, after a quarter of
strong growth. The licensing of a third mobile operator and new WiMAX operator in the broadband market
also helps to give the score a significant boost. However, the ongoing conflict in the northern part of the
country and the uncertainty surrounding the outcome keep the country risk scores low and prevent Mali
from moving up higher.
Other big gains come from Zimbabwe, with a 10-
point industry risk increase, Mozambique (7.5) and
Senegal (7.5). Proposed legislation from regulator
PORTRAZ to grant converged licences and from the
Reserve Bank of Zimbabwe (RBZ) to facilitate
mobile banking offer upside potential for the
industry, with our forecast predicting an 8.5%
CAGR until 2017. A large boost in ARPU for
Vodacom Mozambique helped improve the
market's score, as does an upcoming auction for
800MHz spectrum. Senegal outperformed
expectations throughout 2012, with Sonatel
reporting impressive annual results, resulting in
significant upgrades to our forecasts.
Tanzania, Sudan, South Sudan and Democratic
Republic of Congo (DRC), where no improvement
to industry risks was recorded, generally show
slowing growth, or have significant downside risks to their outlooks. For example, the DRC remains the
only country not connected to the West African Cable System, whereas South Sudan's underdeveloped
industry will continue to hamper its growth prospects. No changes have been made to country risks or
country rewards scores, indicating that there have been no major changes to our views. Ongoing instability
in countries such as Mali and South Sudan should ensure that this does not persist into another quarter and
we would expect to see changes in both directions next quarter.
Industry And Country Risk TheDifference-Makers
Country Comparison KPIs, Q313
Source: BMI
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Table: Sub-Saharan Africa Industry Risk/Reward Ratings, Q313
Industry Rewards
Country Rewards
Industry Risks
Country Risks
TelecomsScore Rank
PreviousRank
Nigeria 52.3 45.6 70.0 65.1 55.2 1 1
South Africa 54.6 51.6 60.0 57.5 55.1 2 2
Angola 55.0 57.3 30.0 68.2 53.8 3 4
Gabon 42.8 73.3 50.0 58.3 53.7 4 3
Ghana 45.0 53.3 70.0 56.5 52.5 5 5
Botswana 38.5 59.3 60.0 71.8 51.8 6 6
Senegal 42.5 50.0 60.0 57.6 49.2 7 8
Cote d'Ivoire 40.0 53.3 60.0 53.4 48.3 8 7
Cameroon 35.0 60.0 50.0 51.1 45.8 9 10
Rwanda 38.0 36.7 70.0 59.2 45.7 10 9
Kenya 37.5 41.7 60.0 53.7 44.3 11 12
Zambia 33.3 40.8 60.0 63.0 43.6 12 11
Mauritius 35.0 38.3 50.0 58.5 41.6 13 17
Uganda 33.3 36.7 55.0 60.8 41.5 14 15
Namibia 33.8 45.3 40.0 57.9 41.2 15 13
Tanzania 28.5 39.3 65.0 56.4 40.8 16 14
Mauritania 35.0 41.4 40.0 45.9 39.0 17 18
Mozambique 30.0 37.8 50.0 52.1 38.2 18 20
Zimbabwe 40.0 39.0 40.0 27.9 37.9 19 22
Democratic Republic of Congo 30.9 32.1 70.0 36.6 37.9 20 16
Malawi 27.0 36.7 60.0 50.7 37.9 21 19
Mali 35.0 39.0 40.0 34.8 36.7 22 25
Ethiopia 35.0 40.3 10.0 51.6 35.1 23 21
Sudan 26.1 43.7 40.0 31.7 33.3 24 23
South Sudan 27.5 47.0 20.0 40.4 33.1 25 24
Burundi 22.5 30.0 60.0 33.5 31.6 26 26
Average 36.7 45.0 51.5 52.1 43.3
Scores are weighted as follows: 'Rewards': 70%, of which Industry Rewards 65% and Country Rewards 35%; 'Risks':30%, of which Industry Risks 40% and Country Risks 60%. The 'Rewards' rating evaluates the size and growth potential of a telecoms market in any given state, and country's broader economic/socio-demographic characteristics, which impact the industry's development; the 'Risks' rating evaluates industry-specific dangers and those emanating from the state's political/economic profile. Source: BMI
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Ghana Risk/Reward Ratings
Ghana remains in fifth position on BMI's Risk/Reward Ratings table this quarter, despite its aggregate score
jumping to 52.5, up from 50.2 in our previous update. The country is behind Nigeria, South Africa, Gabon
and Angola on our table, scoring above the regional average in all four categories of our telecoms ratings.
Ghana's improved score on BMI's Risk/Reward Ratings this quarter is due to a better score in the industry
rewards category, increasing from a score of 40.0 in the previous quarter to a 45.0 this quarter. Ghana's
industry rewards has gone up as a result of newly released data from the regulator showing strong uptake of
data services and a new connection to international bandwidth on the African Coast to Europe submarine
cable. Both of these developments strengthen our optimistic forecast for the broadband sector, to 2017,
which is based on the rapid expansion of wireless data networks, the government's computerisationprogramme and lower cost of international bandwidth. Moreover, though the country's mobile penetration
rate has surpassed the 100% mark, its mobile market continues to record strong subscriber
growth. However, these factors are counterbalanced by the increasing downward pressure on ARPUs and,
consequently, tightening operating margins.
Ghana's relatively high country rewards score remains unchanged since our last update, at 53.3, reflecting
its positive economic outlook. The country has a nascent oil and gas industry, and we expect strong GDP
growth over the next few years. This will increase the rate of urbanisation and, potentially, boost
employment and income levels in the country. These factors, according to our country rewards
methodology, have the potential to ease the rollout of next generation network infrastructure as well as drive
demand for high-value telecoms services.
Ghana's industry risks score remains unchanged from our previous update. Despite having a relatively
liberalised market, and the presence of competition in it mobile telephony, fixed-line and internet access
segments, Ghana's wireline telecoms market remains dominated by the incumbent operator Vodafone
Ghana (formerly Ghana Telecom). Ghana's relatively strong score in this category reflects the privatised
status of Vodafone Ghana, which has opened the door to private investment and bodes well for the future
development of the country's infrastructure. However, Vodafone Ghana continues to have monopoly control
over the provision of national backbone infrastructure; this is seen by some as a problem which needs to be
overcome in order to ensure the future growth of the internet sector. In addition to introducing competition
in the provision of national infrastructure, there is a need to enhance the level of competition at the local
access level, not least through the licensing of new broadband wireless access (BWA) providers. Recent
developments suggest that progress is being made in this area, with the issuance of BWA licences.
Meanwhile, the mobile market, in terms of voice and data services, continues to be dominated by South
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Africa's MTN. Steps to encourage an increased level of mobile market competition include the introduction
of mobile number portability and the development of a clearer regulatory framework on the construction of
telecoms masts.
Ghana's country risks score, at 56.5, reflects our positive view of the country's political and economic
environment in 2013 and beyond. Ghana successfully held competitive and keenly contested elections in
December 2012. John Dramani Mahama of the National Democratic Congress (NDC) emerged victorious
as the people's elected choice. The NDC also obtained a parliamentary majority in the elections. On the
economic front, we hold a positive outlook on private consumption growth, anticipating that the rapid
growth of key sectors, including oil and gas, infrastructure and retail, will generate wealth and consequently
boost consumer spending. Granted, this effect will be unevenly spread across the country, with pockets of
growth likely to develop around key projects, and the southern area between Accra, Kumasi and Sekondi-
Takoradi (known as the 'golden triangle') is likely to be especially prosperous. Furthermore, the high
interest rate environment and relative weakness of the cedi may dampen demand somewhat. Nevertheless,
we expect strong growth in aggregate private consumption, forecasting an increase of 8.0% in real terms in
2013 (contributing 5.3 percentage points (pp) to headline growth), followed by an annual average of 6.5%
over 2014-2017.
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Market Overview
Mobile
Regional Perspective
Ghana's mobile penetration rate reached 100% for the first time at the end of December 2012. This gave the
country the seventh highest mobile penetration rate in the region at the end of that period. Over our forecast
period, through to 2017, the country's mobile market is expected to record a CAGR of around 4.6%, the
19th highest in the region. The relatively slow growth reflects increasing market saturation as well as the
likelihood for operators to focus on high-value mobile data services in the future to offset declining revenue
growth from traditional voice services. Ghana's 3G penetration and ARPU were in the bottom half of our
regional table in 2012, although there has been a massive surge in uptake of 3G services over the last year.
Regional Perspective
Mobile Penetration (LHS) And Key Market Indicators, 2013 (RHS)
f = forecast. Source: BMI
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Table: Ghana Mobile Market Regional Comparison, 2012
GhanaSub-Saharan Africa Rank (Out of 26)
CAGR 2012-2017 (%) 6.3 7.5 15
Mobile penetration (%) 100.3 76.4 7
3G as % of entire market* (%) 4.9 8.4 14
ARPU (US$)* 4.7 7.1 14
*= Out of 21 countries. Source: BMI
Key Developments
■ Expresso announced plans to launch high-speed broadband services as its link to the Africa Coast toEurope (ACE) submarine cable went live in May 2013. Expresso Telecom is a partial owner of the
17,000km-long cable, and will be solely responsible maintenance of the cable in Ghana and Nigeria and
manage the construction, operation and maintenance of cable landing stations in Mauritania, Senegal and
Guinea Conakry.
■ In May 2013, the National Communication Authority (NCA) published results on mobile data market
shares for the first quarter of 2013. The data showed that 34.5% of mobile subscribers also use data
services, and MTN has the lion's share of the market with 65%. The rest of the data market is split
between Tigo, with a 14% share; Airtel with 10%; Vodafone with 7%; Glo with 3%; and finally
Expresso with a 1% share.
In March 2013, MTN announced plans to invest around US$105mn in upgrading and expanding its network
in 2013. The operator is rolling out terrestrial fibre-optic cable networks across the country to enhance data
services. MTN Ghana also plans to deploy new 3G base stations and around 200 2G sites.
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Market Growth
There were 26.462mn mobile subscribers in Ghanaat the end of March 2013, according to market data
published by the National Communications
Authority (NCA). This was a growth of 3.3% q-o-q
during Q113, and a y-o-y growth rate of 22%. This
brought the country's mobile penetration rate to
101.3% at the end of March 2013. BMI believes the
strong performance over the last year, despite the
introduction of mandatory SIM registration in 2011,
was mainly due to the increase in competition in the
mobile market following the launch of commercial
services by sixth operator Globacom in April 2012.
Although Ghana's mobile penetration rate is high by
regional standards, we expect subscriber growth to
remain strong over our forecast period, through to
2017, considering the low mobile penetration rate in rural areas where majority of the population live. BMI
notes that some operators are beginning to implement strategies for rural roll-out to take advantage of the
significant subscriber growth opportunities in underserved areas. An example of this is the partnership
between Tigo and Ireland-based firm Altobridge to extend mobile services to underserved areas using the
latter's low-cost solution specifically designed for small communities of less than 1,500 residents. The
project, which has so far recorded impressive results, is also supported by the Ghana Investment Fund for
Electronic Communications (GIFEC), an agency of the Ministry of Communications.
Table: Ghana Mobile Market ('000)
Q112 Q212 Q312 Q412 Q113 Y-o-Y Change
MTN 10,394 10,758 11,270 11,735 12,024 15.7
Net additions 238 364 512 465 289
Market share (%) 48 46 45.3 45.8 45.4
Vodafone 4,524 4,819 5,027 5,259 5,609 24
Net additions 248 295 208 232 350
Market share (%) 20.9 20.6 20.2 20.5 21.2
Ghana Mobile Growth
2010-2013
Source: BMI, NCA, operators
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Ghana Mobile Market ('000) - Continued
Q112 Q212 Q312 Q412 Q113 Y-o-Y Change
Tigo 3,642 3,553 3,758 3,698 3,676 0.9
Net additions -280 -89 205 -60 -22
Market share (%) 16.8 15.2 15.1 14.4 13.9
Airtel 2,897 3,022 3,041 3,192 3,384 16.8
Net additions 271 125 19 151 192
Market share (%) 13.4 12.9 12.2 12.5 12.8
Glo na 991 1,610 1,568 1,607 100
Net additions na 991 619 -42 39
Market share (%) na 4.2 6.5 6.1 6.1
Expresso 202 227 178 166 162 -19.8
Net additions 16 25 -49 -12 -4
Market share (%) 0.9 1 0.7 0.6 0.6
Total Subscriptions 21,660 23,370 24,884 25,618 26,462 22.2
na = not applicable. Source: BMI, NCA, operators
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Market Share
MTN continued to be Ghana's largest mobile
operator by subscribers at the end of March 2013,
with a total of 12.024mn subscribers and a market
share of 45.4%. Although the operator had a net gain
of 289,000 subscribers in the quarter, this was
significantly lower than its net gain of 465,000 in
Q412 and lower than Vodafone's net gain of
350,000 subscribers for the same quarter. Despite
showing good subscriber growth throughout 2012,
the operator's market share has been trending down
since Q310, partly because of the commercial launch
of mobile services by the sixth mobile licensee, Glo
Ghana. MTN's market share fell by 2.6pps in the 12
months to March 2013.
MTN's performance in Q412, which gave it a 63.4%
of total net additions that quarter, was remarkable considering that the regulator had suspended the sale of
new MTN SIM cards in early December because the deteriorating quality of service provided by the
operator. The ban lasted for the whole of December, including the busy Christmas period, and was only
lifted in late January 2013. However, it appears the operator's rivals failed to capitalise on this to boost their
subscriber bases. BMI calculates that the remaining five mobile operators jointly accounted for the
remaining 36.6% of net additions in Q412.
Vodafone remained in second place in Q113, with a subscriber base of 5.609mn. The operator recorded net
additions of 350,000 subscribers in Q113, significantly higher than its average quarterly net additions of
246,000 in 2012. The operator's position appears to be secured for now as its two closest rivals, Tigo and
Airtel, are not. Tigo, which Vodafone beat to second position in Q411, recorded net losses for six out of the
seven quarters to Q113, while Airtel's subscriber acquisitions over the past two years have been largely
inconsistent. Vodafone's market share of 21.2% at the end of Q113 was up from 20.5% in the previous
quarter.
As mentioned above, Tigo underperformed its rivals over the two years to December 2012. BMI calculates
that the operator's subscriber base of 3.676mn at the end of Q113 reflects a decrease of 22,000 from the
previous quarter and 426,000 from a peak base of 4.102mn recorded at the end of Q211. As a result, the
Market Shares
2010-2013
Source: BMI, NCA, operators
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operator's market share fell to 13.9% at the end of Q113, from 14.4% in the previous quarter and 16.8% a
year earlier.
For its part, Airtel had 3.384mn subscribers at the end of Q113. This was a growth of 6% q-o-q and 16.8%
y-o-y, and reflected net additions of 487,000 subscribers during the 12 months to March 2013. Although
Airtel reported only one quarterly net loss in the two years to Q113, its subscriber gains have been less
consistent that those of its major rivals, resulting in a fairly flat market share since the beginning of 2012.
The operator had a market share of 12.8% at the end of Q113, up from 12.5% in the previous quarter, but
down from 13.4% a year earlier.
The launch of Globacom's (Glo Ghana) operations in Ghana has significantly increased competition in the
country's mobile market, in line with BMI's expectations. This is mainly evidenced by investments in
network infrastructure development and, perhaps more worrying for the five incumbent operators, the re-
emergence of intense price competition. Glo Ghana, owned by Nigeria-based Globacom Limited, launched
commercial operations in April 2012, almost four years after winning the country's sixth mobile licence in
mid-2008. BMI had predicted Glo would adopt an aggressive marketing and pricing strategy to gain a
foothold in the market, considering the significant changes in the market dynamics between 2008 and 2012,
including the rise in the mobile penetration rate from just 40.1% to more than 85%, the reduction of
interconnection rates and the implementation of mobile number portability and mandatory SIM registration.
Glo's aggressive marketing strategy involved number reservation by prospective customers many months
ahead of its commercial launch and sponsorship of popular sports and entertainment events in the country.
Glo also became the only operator to launch operations with 100% network coverage, with advanced
mobile broadband technology and capacity for up to 10mn lines. However, it is the firm's pricing strategy
that has unnerved its rivals. Glo initially launched low-priced packages, and in September 2012 introduced a
new long-term tariff plan called Glo Gista that allows subscribers to make on-net and off-net calls for
GHS0.06 (US$0.03) a minute. By comparison, the firm's rivals charge between GHS0.084 and GHS0.144
for standard on-net calls, with off-net calls charged at higher rates in many cases.
BMI notes that Glo's strategy has yielded strong results in a relatively short period. According to regulatory
data, Glo had 468,508 subscribers after one month of launching commercial services in Ghana, a market
share of 2.1% at the end of May 2012. The operator's subscriber base grew almost fourfold in the following
four months to reach 1.568mn by the end of December 2012, with its market share expanding by a similar
proportion to 6.1% at the end of the same period. Despite recording a net subscription loss of 42,000 in
Q412, likely due to the discounting of lines that became inactive upon the expiration of promotional tariffs
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introduced soon after it launched commercial operations, Glo recorded 39,000 net additions in Q113 and
managed to maintain its 6.1% market share. Glo is now in 5th position in terms of market share, ahead
of Expresso and could challenge for a higher position if it continues to grow at the same pace registered in
its first six months of operations.
Kasapa, now rebranded as Expresso, occupies the smallest share of the market. This is the third name
change for the company, following the change from Celltel to Kasapa in 2003. After five consecutive
quarterly net losses, Expresso recorded net additions of 16,000 subscribers in Q112 to take its subscriber
base above the 200,000 mark. In Q212 it expanded this further adding 25,000 new subscribers to finish the
quarter with 227,000 subscribers. However, the operator's net additions of 41,000 subscribers in H112 was
offset by net subscription loss of 61,000 subscribers in the three quarters to March 2013, bringing its
subscriber base to 162,000 and market share to just 0.6%.
Based on the NCA's figures and data reported by the operators, we calculate Ghana's mobile market
registered 4.802mn net additions in the 12 months to March 2013. This was a considerable improvement on
the 3.730mn registered in 2011. On a quarterly basis, the market added 884,000 subscribers in Q113, an
improvement compared to 734,000 in Q412, and 494,000 in Q112, but still much lower than 1.711mn in
Q212 and 1.514mn in Q312.
Usage
Previously, MTN and Zain were the only Ghanaian
mobile operators that consistently reported ARPU
figures. However, since its acquisition by India's
Bharti Airtel in Q210, ARPU data has ceased to be
available for Zain. Nevertheless, the general trend
portrayed by MTN continues to be one of declining
ARPU. This is a characteristic that has been seen
across Africa in recent quarters. For example,MTN's ARPU stood at US$14 throughout the first
half of 2008; this was in line with Q407. However,
the operator's ARPU has been on a downtrend since
the second half of 2008, falling to US$5.9 in March
2013.
MTN ARPU (US$)
2010-2013
Source: BMI, MTN
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Networks
3G
The first commercial 3G services for non-business customers were only launched in early 2009. Although
uptake of 3G services was slow until 2011, since 2012 the market has picked up significantly. BMI believes
that the current market for 3G services is still relatively small. We estimate that, by the end of 2012, Ghana
had around 550,000 mobile customers with 3G handsets; this was equivalent to 2.6% of the total mobile
customer base. All six of the country's operators offer 3G services, but in March 2013 MTN dominated the
market with a 65% share. BMI believes MTN's dominance in the data market is a combination of its
leading position in the voice market and high-quality network coverage. We expect the South African
operator to face stronger competition in the future, though, as all operators now have access to international
bandwidth on submarine cables. We believe increased connectivity has also had an important impact on the
fast-paced growth of the data market over the last year.
It should be remembered that not all mobile customers with 3G handsets are active users of 3G services. To
a large extent, this is a reflection of the relatively low spending power of most Ghanaians. However, at the
top end of the market, the operators will no doubt find a small user base for value-added services, and this
will help prop up ARPUs, which will continue to face pressure from increased competition. Although
increased usage of data services will help maintain ARPUs, competition will also force data revenues down,
especially with all six operators offering 3G services.
As of May 2013, all operators in Ghana had access to one or more submarine cables and offered advanced
3G data services. In May 2013, Expresso was the last operator to launch advanced 3G services on the back
of the African Coast to Europe (ACE) submarine cable, of which it is a partial owner. Glo has access to its
own Glo-1 cable and MTN signed a deal to access the West Africa Cable System (WACS) in March 2012.
Main One is the fourth major submarine cable providing connectivity to Ghanaian mobile operators.
Market leader MTN Ghana launched 3G services for residential customers in February 2009. MTN reported
that it had 210 3G base stations and 166,000 3G subscribers at the end of 2010. The operator did not
disclose the number of 3G subscribers on its network at the end of 2011, although it reported that, by the
end of the year, it had at total of 335 3G base stations on its network, and that data accounted for 5.5% of its
total revenues. At the end of 2012, MTN reported a 96.1% y-o-y increase in data revenues and a total of
1.3mn 3G devices and 800 3G base stations on its network. According to the NCA, in March 2013 MTN
had a total of 5.82mn data subscribers. The operator attributed this massive growth in data services to
improved handsets, lower tariffs and bundles. Investigation on mobile operators' pricing shows that MTN's
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services are actually the most expensive in Ghana, though. This leads BMI to believe that MTN's success is
due to its leading position in the voice market, good marketing through ICT centres and a data festival every
September, and good quality network coverage. In May 2012, MTN successfully raised a syndicated loan
worth around US$276mn, according to the firm's managing director, Michael Ikpoki. The funds will mainly
be used to upgrade and expand its 3G network. In January 2010, MTN announced that it had appointed
Chinese equipment maker Huawei to deploy a UMTS900 platform on its network. The 900MHz platform
will be used for voice, video and data-based services and is based on Huawei's fourth generation 3900-
Series Node B, which the vendor claims combines advanced technology with high efficiency to boost
operators' productivity. The system supports a bandwidth of just 4.2MHz to provide UMTS service while
working seamlessly within the operators' existing GSM networks. It is understood that MTN will use the
upgrade to extend the reach of its high-speed data networks to more 'rural' communities.
Swedish vendor Ericsson has also been helping MTN Ghana develop UMTS900 services. In March 2010, it
was reported that Ericsson and MTN had successfully trialled UMTS 900MHz, which will be used to
complement MTN's existing UMTS 2100MHz infrastructure in urban areas. The enhanced 3G network is
designed to offer improved network capacity and better mobile broadband coverage. The agreement
between Ericsson and MTN Ghana makes Ericsson responsible for access, transport and transmission of
UMTS 900MHz. Full network roll-out was set to commence in Q210.
MTN's main competitors in Ghana's 3G market are Airtel (formerly Zain) and Tigo. When Zain launched as
the fifth mobile operator in Ghana in December 2008, it launched both GSM and HSDPA networks,
although HSDPA was initially only available in the capital. This is was the first 3G service in Ghana. In
November 2009, Zain pledged to invest more than US$400mn in Ghana to deliver a reliable, high-quality
3.5G mobile network. Zain Ghana also revealed that it had awarded a contract to a UK-based independent
provider of network and data management tools and services, Aircom International. It is understood that,
after Bharti Airtel acquired Zain's Africa operations, Aircom International helped design and plan Airtel
Ghana's migration from 2G to 3.5G.
In January 2012, Airtel introduced 3.5G HSPA+ based services, offering speeds of up to 21Mbps, in the
country. The operator also announced plans to deploy an additional 300 cell sites throughout the country by
April to enhance the accessibility of mobile broadband internet for its subscribers. Airtel aims to expand its
3G coverage by 50% with the roll-out of additional cell sites across Ghana.
In February 2011, Millicom Ghana, which operates as Tigo, revealed plans to roll out a 3G service to its
subscribers in March 2011. At the time of the announcement, it was understood that the operator had
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