Ghana currently plays host to some six mobile telecom operators, o f these, Tigo, Espresso, MTN, Vodafone and Airtel are currently operational while the sixth, Globacom is set to roll out nationwide service before the end of the second quarter of 2011.
The advent of (3G) technology and its faster data transmissions has transformed mobile phones into devices that can be used to take pictures, download songs, play games, access the internet, and send emails. The mobile telephone has become an indispensable communications device in the Ghanaian social and economic fabric than could have been imagined a decade ago.
Competition
As competition has intensified, mobile operators have increased their network coverage, capacity and customer loyalty programs. Between 2005 and 2010, the mobile subscriber base has increased more than six-fold from 2.8 million subscribers to 17.4 million. In the same period, mobile penetration shot from 13.3 percent to 71.6 percent.
In 2010, the mobile subscriber base grew at only 15.4 percent, which was actually a significant slowdown compared to gains in excess of 39 percent annually during each of the previous five years. The result of this slowdown in subscriber growth is attributed in part to the market being at or nearing saturation point and partly to the ongoing government mandated SIM (subscriber identity modules) registration exercise.
Two factors can be said to account for the high penetration: subscribers having multiple SIMs for various economic reasons and the inclusion of inactive SIMs that increases the total reported above the active subscriber base.
Pricing
Competition in the mobile market has begun to put downward pressure on call rates. In recent years, the price per minute of usage has declined consistently. For example, in 2010, the average per-minute cost of on-network dropped 30 percent, from $.10 in 2008 to $.07 in 2010. While that of off-network declined 36 percent from $.14 in 2008 to $.09 in 2010. The drive towards single rate for both on-network and off-network calls allows operators to retain their customers, in the mist of intense competition. Traditionally, off-network calls are more expensive than on-network calls due to interconnection cost adding up total cost which directly affects the price level.
Mobile Tariffs (2008-2010)
Year 2008 2009 2010
On-Network $0.10 $0.09 $0.07
Off-Network $0.14 $0.10 $0.09
Mobile Tariffs Growth Measured in dollars (%)
Year 2008 2009 2010
On-Network -10.0 -22.2
Off-Network -28.6 -10.0
Source: WATRA, NCA, Pal Ecommerce
In 2010, Vodafone and Bharti Airtel galvanized the mobile pricing market by introducing ¢.08 per minute of call for both off and on-network calls. But Vodafone subscribers need to register via a short code before enjoying the new rate. Since then, the other mobile operators have also come out with a number of different pricing plans.
MTN differentiates itself from the rest of the mobile operators with its MTN Zone which offers between ¢.015 and ¢.10 per minute depending on the network traffic and congestion in the area. With interconnection rate set at ¢0.05, there is little room for mobile per minute rate to fall much further, and the growing use of mobile phone for data will result in increasing spending per subscriber.
As mobile penetration approaches saturation, coupled with a steady decline in average revenue per user (ARPU), mobile operators are upgrading their networks to 3G to deliver value-added data service. The ARPU is calculated by dividing the aggregate amount of revenue by the total number of users who provided the revenue. It is one of the important financial indicators for tracking profit potential.
Data will become a more important component of the market. Between 2011 and 2015, significant growth in data services will boost the total revenue per user. Historically, subscriber growth has been the principal driver of mobile services revenue. This relationship is expect to change during the 2011-2015 period as subscribers growth slows, while the expanding data application market leads to accelerating growth in ARPU.