A strong 2011 for Ghana with more growth to come

Ghana's mobile sector will have 27.281mn mobile subscribers by 2016, up from 21.518mn at the end of 2011, according to BMI’s five-year forecast.

The strong performance by mobile operators in 2011 was likely due to promotional deals offers introduced by offered by companies in a bid to defend their market shares amid downside risks from SIM registration and mobile number portability. Meanwhile, the outlook in the country's fixed-line remains unclear, given that operators' subscriber bases continue to fluctuate without a distinct short-term trend - mobile broadband subscriptions will be a key growth driver over the next few years.

Despite a seemingly late arrival to the market, Globacom’s mobile operations in Ghana could flourish, with intelligent marketing strategies such as extensive 3G network coverage and the provision of a facility that would enable prospective customers to reserve their preferred numbers. However, the operator would need to minimise its roll-out expenses in order to become profitable in a reasonable timeframe, considering the increasing downward pressure on ARPUs and voice revenues. Globacom failed to launch its operations on schedule, citing logistics constraints beyond its control.

Meanwhile, the NCA reported that a total of 138,458 mobile subscribers have used the MNP system at the end of October 2011, four months after commencement. The regulator also noted that the time taken to complete a port fell to less than three hours in October 2011, down from more than three hours in September 2011 and more than four hours in August 2011.

In terms of regulatory developments, the NCA announced in late October 2011 that it will release as many as four broadband wireless access (BWA) licences in the 2500-2690MHz band. The regulator will use a multi-stage selection and award process (a combination of “beauty contest” and negotiations) to select prospective applicants for the award of a BWA License. The minimum reserve price for a 30MHz lot or 2 X15 MHz lot is US$5.5mn.

The major developments in the Ghanaian telecoms sector in 2011 included the extension of the deadline for the completion of mandatory SIM card registration by 90 days from the original date of June 30 2011 and the implementation of mobile number portability (MNP) on July 7 2011. Both developments were expected to temper subscriber growth during 2011 and through to 2015. However, intensive market and promotional activities by operators in the run-up to the original deadline for SIM registration resulted in better than expected subscriber growth during H111.

According to the NCA, there were net additions of 1.763mn subscribers in H111, bringing the total subscriber base to 19.199mn and mobile penetration to 77.4% by June 30 2011. About 1.208mn subscribers or 68.5% of H111 net additions were in Q211 – an indicator of the impact of promotional activities before the original deadline of SIM registration on subscriber net additions. MTN and Vodafone accounted for 87.6% of net additions during H111.

Considering the rapid subscriber growth during H111 and the strong likelihood of a repeat in H211 as operators prepare for a new deadline to be announced by the regulator, the market is expected to have about 20.835 mobile subscribers by the end of 2011, reflecting a penetration rate of 84%. Growth is expected to slow down into single digits across the next five years, with mobile penetration forecast to reach 95.7% by 2015.

Meanwhile, MNP seems to have taken off in Ghana. According to the NCA, 21,059 subscribers ported their numbers to other mobile operators by July 31 2011 following the launch of the MNP service on July 7. Third-ranked Vodafone claimed as many as 43% of ported numbers switched to its network during that period. The implementation of MNP has had a positive impact on competition in the mobile market and the choice operators have over changing service providers. However, the long-term impact of MNP on market dynamics may be limited as the majority of net additions are through new subscriber acquisitions.

Continued fluctuation in the fixed-line subscriber base indicates slower growth in the fixed-line sector over the next five years, with market penetration reaching 1.3% by 2015. There is no new data on the broadband and internet sector, but it is like that wireless access technologies - as well as the increase in international bandwidth from submarine cables - will be major growth drivers of internet penetration in Ghana.

Ghana's political risk profile is relatively favourable at present, at least in the context of West Africa. However, oil revenues will require careful management will be formidable test for the government over the next decade. In general terms, the political system is relatively young and untested. Multi-party democracy has only existed since 1992, prior to which Ghana suffered a string of coups. Against this backdrop, continued political stability is by no means assured over the coming years. Moreover, Ghana is now producing its own oil, and the management of the attendant revenues is likely to prove a critical test of the political system.

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