MTN Ghana barred from adding new subscribers

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BR MTN4 BLOOMBERG NEWS Customers are served at an MTN shop in Cape Town. The cellular network operator has been told to stop adding new subscribers in Ghana, one of its key markets. Photo: Bloomberg

Asha Speckman

MTN Ghana has been ordered to stop adding new subscribers to its network by the country’s telecoms regulator because of the deteriorating quality of its network.

Mawuko Zormelo, the acting head of consumer and corporate affairs at the Ghana National Communications Authority (NCA), said yesterday that the order had been issued to MTN Ghana, formerly Scancom, on Friday following “deliberations” with the operator.

Zormelo said MTN Ghana, which has 11 million subscribers and more than 50 percent market share, had been operating well but was starting to experience challenges.

“The challenges were noted. We have been in deliberations with them.

“The directive is an outcome of those deliberations.”

He did not comment on further penalties or when the order would expire.

In a statement on the NCA’s website, the regulator said: “Following the recent spate of service disruptions on the MTN network, the NCA has had to engage Scancom on several occasions, on the issues of quality of service degradation (that is network reliability, network availability, call drop, call set-up, denial of service and so on) being experienced by consumers of mobile services.”

The regulator said despite the talks, network performance had continued to deteriorate.

“Consequently, the NCA has directed Scancom to, with immediate effect, cease selling and/or adding any new SIM cards/subscribers to [the] MTN network until further notice,” the organisation said.

Paul Norman, MTN Group chief human resources and corporate affairs officer said “This ban will not impact existing subscribers of MTN Ghana, and we currently do not expect this to have a material impact on the performance of the business for 2012.

“MTN is actively engaging the regulator to address their concerns and hope to have a speedy and amicable resolution of the matter.”

Ghana is one of MTN’s largest markets, after Nigeria, Iran and South Africa.

Dobek Pater, a director and analyst at Africa Analysis, said Ghana was a highly penetrated market approaching 90 percent SIM card penetration.

“This means while greenfields subscriptions are still available, MTN may have been churning quite a few subscribers from competitor networks onto its network.”

Pater said if the moratorium imposed by the regulator extended to a month or more, MTN could lose up to $700 000 (R6.2 million) in revenue based on a calculation according to first-half performance.

During the first six months of the 2012 financial year, MTN acquired about 100 000 net subscriptions a month.

Pater also said MTN’s capital expenditure had declined significantly from 2010, “going into a post build-out phase”.

“This development means that MTN may decide to allocate more capex for network improvement during the 2013 financial year,” he said.

MTN has experienced challenges in several of its African operations this year. Last month it launched a formal complaint with the Judicial Service Commission in Uganda against a chief magistrate who was implicated in a tax evasion case against MTN that was fraught with irregularities.

Earlier this year the company’s Nigerian unit was also fined for poor network quality.

MTN’s shares closed 0.07 percent higher at R166 on the JSE yesterday.


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