Airtel to exit Ghana operations as government prepares takeover

Indian telecom giants Bharti Airtel has announced that it plans to end its Ghana operations by selling all of its 100% stake in its Ghana division, AirtelTigo.

AirtelTigo is the result of a 2017 merger between Bharti Airtel and Swedish telecommunications company, Millicom, and Airtel owns a 49.95% non-controlling stake in the business.

On Tuesday, October 27, 2020, the Barti Airtel board announced that it had approved the sale, on a going concern basis, of the joint venture to the Ghana government. It will also be taking an impairment charge rumoured to be around $12,904 for the transaction.

The government of Ghana is reportedly set to acquire 100% shares of AirtelTigo, its customers and agreed liabilities. The government is expected to temporarily operate the assets and help protect the jobs of employees and the Interests of customers and stakeholders.

By entering this deal, the government could essentially be protecting various jobs in the telecom sector and related industries.

When Bharti Airtel merged with Tigo in 2017, the government retained the option to acquire additional shares after the merger. The merger made the telco the second largest telecom company in MTN at the time.

However, AirtelTigo fell in the pecking order behind the dominant MTN and Vodafone.

Recall that in June 2020, the Ghana communications authority laid out plans to disrupt MTN’s dominance by declaring it as significant market power.

With 23.9 million voice subscriptions, MTN Ghana controls 57% of the subscriber market share in Ghana, far ahead of Vodafone, AirtelTigo, and Glo at 21.97%, 20.3%, and 1.75% respectively.

Despite the presence of 52 Internet service providers and 3 other telcos, MTN enjoys 67% of the country’s data market and currently leads the country’s fast-growing mobile money sector.

As we explained in our previous piece, the communications regulator planned to introduce policies like price floors and ceilings for calls, data, and text messages.

While these policies are great, they are not exactly foolproof, and its implementation in Nigeria has not had the desired effect.

Following their declaration as significant market power (SMP), MTN also sued the Communications authority but a High court dismissed their case, stating there was sufficient evidence for MTN Ghana to be declared a significant market power.

Though MTN briefly challenged the decision at the Supreme Court, by October, it decided to pull out of the case.

With this, the government was now free to take corrective measures against MTN under the guise of promoting competition and protecting consumers and network operators.

Some of the corrective measures approved by the NCA are:

  • Review and approve all charges by MTN
  • Set caps on what MTN can charge for its services
  • Ensure that MTN’s access to information did not disadvantage other operators
  • Impose a 30 per cent interconnect rate for two years in favour of other “disadvantaged operators

Now that the government will now be a direct competitor, it remains to be seen how the country’s telecom sector will play out in the coming months

Photo Credit: Jan Bogaerts Fotografie Flickr via Compfight cc