The regulators in Ghana and Nigeria have a duty to monitor and check dominant companies because of the potential ramifications on the cost and quality of the network. Our governments, in particular, should take notice and ask relevant questions: How can telecom companies be slashing prices in their home markets, while increasing prices in Nigeria – their largest market and breadbasket? Are we the cash cow now?
Dominance is the power that enables one producer or seller of goods or an operator or service provider to make decisions and act independently of its competitors and customers in a given or specific market.
Typically, a dominant market confers undue power or advantage on the sole producer/seller or service provider to raise prices or reduce output, without being concerned about competitors and the customers.
In a market where one dominant supplier exists, there is anti-competitive behaviour, with potentially harmful effects on the customers.
Africa’s telecom sector is fast emerging as a dominant market, with the reported double-faced dealing of Africa’s biggest mobile network operator, the MTN Group. A few days ago, it was reported that MTN South Africa had slashed the price of prepaid mobile data, and also launched a new plan that offers large data bundles at aggressive prices.
According to TechCabal, “a 200GB bundle, for example, is available for Rand 399, working out to just Rand 2/GB – or a thousand times cheaper than the standard, ad hoc rate of Rand 2/MB for data that was common in the industry 15 years ago.”
In contrast, MTN has increased the prices of its services in Ghana, while also planning to increase its tariffs in Nigeria. Specifically on 28 November, MTN in Ghana announced that it has implemented an upward review of its voice and data prices by 15 per cent for most of its products and services, for both prepaid and postpaid customers.
Ghanaians took to social media to express their outrage, describing the move as “outrageous”. One X user, Baffour Kyei, complained that, “if the cost of operation is getting higher for MTN Ghana, then they should stop buying new expensive cars for three years coming… this new cost on us is too much!”
It is also no secret that MTN in Nigeria has been lobbying the Nigerian Communications Commission (NCC) and the Nigerian government to increase its tariffs. On a recent trip a few months ago, the senior leadership of MTN South African visited President Bola Tinubu and various governments; a move many social media commentators in Nigeria described as “a way to lobby for an increase in tariff.”
Over the past decade, MTN has repatriated more than US$10 billion from Nigeria to South Africa to pay profits to its shareholders. The South African company has not stopped repatriating profits, even as inflation has soared and devaluation of the currency has hit hard.
Also, even with the weakness, MTN Nigeria’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins remain what industry watchers have described as ‘outstanding’; this is close to 47 per cent, down from 53 per cent last year. AT&T, by contrast, which operates on the basis of average revenue per user (ARPU), of more than $50 per person compared to MTN’s few dollars, operates at a circa 40 per cent EBITDA margin! “What justifies their increase in pricing when they are so profitable?”, as lamented by a Nigerian on the social media platform, X (formerly Twitter).
It is obvious that MTN is bent on making its ordinary Ghanian users the sacrificial lamb and it is planning to ask Nigerian citizens to enlarge the profit it makes, so that it can send larger dividends to its shareholders and invariably subsidise the tariff for the South African user through Nigerian and Ghanian sweat.
One important thing to note is that MTN’s ability to seek price hikes in Nigeria and Ghana, to the detriment of the users, is as a result of its dominant status, which is not the case in South Africa. In Nigeria, MTN enjoys close to 65 per cent of the revenue share of the telecom industry, whereas in Ghana it has close to a 70 per cent market share of subscribers! In South Africa, by contrast, Vodacom has a 40 per cent market share, while that of MTN is close to 30 per cent. This is what happens when dominant companies are allowed to flex their muscles.
The regulators in Ghana and Nigeria have a duty to monitor and check dominant companies because of the potential ramifications on the cost and quality of the network. Our governments, in particular, should take notice and ask relevant questions: How can telecom companies be slashing prices in their home markets, while increasing prices in Nigeria – their largest market and breadbasket? Are we the cash cow now?
Olufela Binuyo, a public analysts, writes from Ibadan.
Support PREMIUM TIMES’ journalism of integrity and credibility
Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.
For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.
Donate
TEXT AD: Call Willie – +2348098788999
