Phone call and other mobile services rates are expected to go up sooner or later, the Chief Executive Officer of MTN Ghana, Serame Taukobong has said, indicating that, low tariff regime may not be sustainable any longer for the telecom industry due to ever-increasing operational cost.
“Ghanaians have enjoyed lower tariffs for a number of years but you cannot do that forever,” Mr. Taukobong told senior media practitioners at Editors Forum’ organized by his outfit in Accra last week.
Telecommunications companies in the country have for a while now been raising flags about their dwindling profit margins in the face of soaring operational cost, a phenomenon which is crippling their existence. Key among the challenges are unstable power supply, depreciating cedi, SIM Box fraud, multiple taxes and what is described as unfriendly regulations by the industry regulator.
Ghanaians have no doubt experienced some rough times in telecoms service quality, just like that of electricity and water, and yet tariffs for those two utilities continue to increase at an increasing rate regularly, while the telecom sector maintains stable tariffs largely due to competition.
On a number of occasions, prices of telecom services came down in some case as service providers embarked on several promotions to excite existing customers and to win new customers. The telcos continued to absorb some costs such as communication service tax, MNP cost and other ever-increasing operational cost elements on behalf of their customers.
In 2012, for instance, Ghana’s telecom sector recorded an average of 0.4% inflation rate, which was the lowest for all sectors according to the Consumer Price Index (CPI) from Ghana Statistical Service (GSS) ending December 2012.
The situation, coupled with other economic challenges, is seriously threatening the profitability of the telecom industry while the state is also being denied revenue that would have accrued from its operations.
The Chief Executive Officer of MTN Ghana said there shall be price increases in the products and services offered by telecommunications companies in Ghana sooner or later if the aforementioned challenges are not addressed.
Mr. Taukobong mentioned the unstable electricity supply across the country, which compelled the company to run its equipment on generating sets and inverters at a high cost.
“We buy more than two million liters of fuel per month to power our generators comparing. If we do not ensure continuous running of these equipment, it will impact our service delivery negatively and we do not want our customers to experience that,” he said.
On SIM Boxing, Taukobong said his outfit lost as much as $800,000 a month. According to him, apart from this being a loss to the company, the government was also losing heavily in terms of taxes. On depreciating of the cedi, the CEO of MTN Ghana said the charges for the services rendered by his outfit were in the local currency while most of the inputs to run effectively were imported and noted that with the cedi falling again, the company required more local currency to convert into dollars to acquire inputs to run the business.
Presently, the cedi is trading at GH¢3.6 to US$1 at the interbank level and slightly more than that on the black market.
He said the company’s total payments to the state amounted to GH¢605 million in 2014. On the company’s investments, he said MTN had allocated GH¢460 million to deal with network and IT investments, with about 90 per cent of the IT investment portfolio already underway.
This year, he said the company would improve its strategic partnerships and support data growth while expanding the customer satisfaction index. He added that the company would also ensure value driven and segmented offerings while streamlining distribution network, saying “we will make the financial services and mobile money a priority.”
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