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

The smaller Mobile Network Operators (MNOs) have saved GH86.6 million as a result of MTN Ghana’s designation as a Significant Market Power (SMP) in the country’s telecoms industry over the past two years.

The SMP was designed, among other things, to level the playing field, reduce the company’s capacity to manipulate tariffs, regulate its profit margin, and perhaps even increase barriers to entry for new competitors or smaller market players.

The second-largest telecom in the country, Vodafone Ghana, now Telecel, earned GH50.4 million, or 58 percent, because to the savings generated by the non-SMP operators in the business.

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 realized.

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 put the NCA’s directive into effect on August 1, 2021, removing the on-net/off-net price disparity from default phone, internet, and SMS tariffs.

On-net / 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 rates 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 interacting with one another on the same network, telcos frequently offer lower on-net pricing via a variety of bundles and promotions.

With a market share of approximately 60% and continued growth over the years, MTN Ghana has been able to use this technique 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 actions to address market inequities in the telecom sector, including: Implementation of 30% asymmetrical interconnect rates for two years, subject to market response, in favor 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 behavior, 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.

NCA clarifies

It is unclear, however, whether non-SMP networks have invested their savings back into their business to enhance network service and grow their market share over time, making it possible for the majority of Ghanaians to largely benefit from lower pricing.

Asked whether non-SMP players are investing or plouging back their savings to bring them up to speed, the Director-General of the NCA, Mr Joe Anokye, said: “So one thing that specified in SMP was the fact that the smaller players should reinvest in the savings from the asymmetry that connects right into infrastructure, but there’s no evidence to show that.

Of course, we haven’t done forensic analysis to know what they use that money for but at some point, probably, we have to do that.”

He, however, indicated that the NCA does not categorically tell the smaller players what they should use that savings for.

The NCA boss admitted that the nature of the business required huge capital outlay and enormous liquidity to operate seamlessly, an indication that presupposed that the savings made might have been used to improve their liquidity position.

Keep up

Mr. Anokye said when asked if they are all interested in overtaking the market’s preeminent leader, MTN, that “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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