Probably the most repeated and well-known success story coming out of Africa over the past decade has been the explosion of cell phones and Information Communication Technologies (ICT). This is usually cited as a prime example of “technology leapfrogging”, i.e. adopting state-of-the-art technology directly instead of going through all the iterative steps pioneered by others. Having worked a fair bit in the telecom industry in Canada (mainly setting up rooftop sites around Vancouver), I am very interest in the details of this story. Digging beneath the effusive excitement and “technologism”, I’d like understand how it all started and who actually controls and benefits from this huge industry.
Without a doubt, cell phones, internet connectivity and instant communications are a big deal here in Ghana–as is the case pretty much everywhere. With a population of just over 24 million, the country has upwards of 25 million cellular lines in use and a penetration rate clearing 100%. Not everyone has a phone to be sure, but it’s also not uncommon to see people juggling two or three phones and many more SIM cards at the same time. Even with this many phones and a population coverage rate of over 80%, there are still about 5 million people left in the digital dark. Most of the 5,583 base tower sites are grid connected and therefore not exceptionally rural. Of the 11% that are off-grid, only about 2% are fed by green energy, (the rest rely on 24×7 diesel generator power), so they are unlikely to be considered “economic” by their private sector operators. Driving along the main roads out of Tamale, brightly lit, modern cell phone towers stand side-by-side with un-electrified, traditional mud-and-stick huts without any acknowledged incongruence.
According to the World Bank, telecommunications is one of the main economic sectors of Ghana behind agriculture and natural resources and is slated to grow rapidly. The state-owned company RLG Electronics actually assembles a fair number of cell phones and tablets in Ghana, but like everywhere the bulk of the handsets come from assembling points across Asia. The cellphone towers themselves typically consist of a metal scaffold, microwave repeater dish and three 120deg azimuth RF (radio frequency) antennas broadcasting at range of up to 50kms. These towers can be erected and operational in a matter of weeks and the standardization and volume has dropped prices drastically in the past decade. Companies such as Helios Towers Africa have been doing record business slamming tens of thousands of these sites in across the continent (I am not sure if NIMBY-ism is given much consideration here). The data and equipment cabinets at ground level house the servers, switches and other equipment used to pick up, redirect, handoff, slice, dice and ship out your voice and data information along with hundreds of other peoples’ every few milliseconds. Most of this equipment, from my experience in Canada, was coming from the big telecom hardware companies such as Ericsson, Siemens, Alcaltel and Cisco. The typical business model in telecom is to “unbundle” the hardware business from the software side, i.e. these hardware companies build and maintain the infrastructure while the telecom providers operate the networks.
So who actually owns these “soft assets” and who is making the money from them? Below is a list of the five main telecom network operators in Ghana and their origins:
MTN – (45.43% market share, 12 million subscribers) This South African Telecom giant is the largest in Africa and operates in 22 countries. Annual revenues in 2011 were $9.4 billion.
Vodafone – (21.19% market share, 5.5 million subscribers). The Ghanaian branch is majority owned by Vodacom Group South Africa which in turn is owned by UK-based Vodafone (the third largest provider in the world). Revenues for Vodacom in 2011 were $7.7 billion.
Tigo (Millicom) – (13.89% market share, 3.7 million subscribers). Millicom is a Luxembourg based provider that mainly operates in the emerging markets of Africa and Latin America. Annual revenues for Millicom in 2012 were $5.1 billion.
Airtel – (12.79% market share, 3.4 million subscribers). Part of the Indian company Bharti-Airtel, this is the world’s second largest provider (behind only China Mobile) and operates in 20 countries mainly in Africa. Annual revenues for Bharti-Airtel as a whole are $8.2 billion.
Glo Mobile – (6.08% market share, 1.6 million subscribers). Headquartered in Lagos, Nigeria; Globacom is one of the newest providers to set up shop in West Africa. They are also the first African company to lay their own 9,800km, $800 million submarine fibre-optic cable from the UK to Nigeria in 2009. Revenue figures were not found.
There is one other provider, Expresso, but I haven’t been able to tell if it’s still operational in Ghana. The bottom-line being that there are a lot of hands in the very big African telecom pie and behind all the branding and “localization” a lot of the money from this major industry is ending up in foreign lands. Like a lot of industries, it seems information on revenues and ownership is hidden behind layers of subsidiaries, licensees, endless mergers and acquisitions, and byzantine corporate structures, so you’re never too sure what you’re buying.
I currently have SIM cards for all of the above providers plus two phones and have been experimenting to find reliable service since I arrived. Reports from people who have lived here for more than a few years seem to agree that the reliability and “choice” of providers has made amazing improvements from the early days of the single public-owned provider, Telecom Ghana. Still, when I pick up my weekly GHC 10.00 ($5) of phone credit from Gemina, the young women who assiduously attends her credit sales box on the street corner near my house for 8-10 hours a day, 6 days a week, I can’t help but think the 5% profit she is making on the sale is a part of the story that is missing from the dazzling successes that are often reported about Africa’s telecom explosion.
[For another perspective on the topic, check out the always perceptive Belinda in Malawi]