Exclusive Interview with MTN Ghana, Ghana’s Telecom Market Leader

Interview with Ebenezer Twum Asante, CEO of MTN Ghana

In general, how has the doing business in Ghana been affected by the ongoing situation in the country?

Let’s first look at it from the positive side. The positive side is the area of opportunity that abounds in Ghana. Actually maybe you are aware that Ghana is the second biggest economy in West Africa and when the ICT sector which our firm belongs to is strong. ICT contributions in West Africa are very significant; you may look at it in terms of penetration: how many Ghanaians have mobile phones? The penetration in Ghana is about 117%, much higher than what you will find in the average West African country. Recently we have also discovered oil in the western region of Ghana, which is putting Ghana on the global petroleum market as a very important country when it comes to oil. Even though the finds are very small at this point in time, it is expected to grow. If you look at the national revenue, it is getting more and more diversified. We used to depend solely on cocoa and gold, but today we also have oil and apart from that the non-traditional exports are also growing. Tourism is becoming more and more important and that means the economy is becoming more vibrant and is attracting a lot of foreign investors and tourists into the country. That is the positive side of Ghana before you look at the cost of doing business.

For us, as an ICT company you may look at the issue of the cost of doing business in four big chunks. The first is the capital investment that we have to put into the economy and into our industry. Every year we spend in excess of one hundred million dollars. Our business is forex dependant because most of the engineering, technology and equipment that we need to do our business are imported. Thus apart from the capital costs there is also the component of Forex. Anything that happens to the currency directly impacts our business. The second thing is that the cell sites that we have are powered first by the national grid, and then supported by genset and batteries. If you take the national grid for instance, it means that the availability of power and energy is a fundamental driver of our business, both in terms of customer experience and also the costs that we incur to be able to power the cell site. When the national grid is not fully available then you have to fall on genset and when you do that you are also hit by the cost of diesel. So in an environment where these factors are impacted, the currency is depreciating, the cost of diesel is rising and the national grid is not fully available, it means that for the limited quantity of power that you get, the cost is very high. All these factors impact the cost of doing business as far as our operations are concerned. Last but not least is the inflation level, the CPI, customer price index; everything we do is driven by the CPI. So when you also have a country and an environment where the consumer price keeps going up, it means that the cost of doing business in terms of the operating expenditure also snowballs. Fortunately, the month of August reported a very positive trend in terms of the cost of doing business as far as the consumer price index is concerned. We recorded the first decline in CPI, and we expect that going forward that trend will be sustained so that overall the cost of doing business in this environment can come down. I am looking at it both in terms of the opportunities as well as some of the downside risks that an operation like ours has to experience from time to time.

Ghana has a penetration of over 100% for voice. When you come to data, the penetration is still below 70%, so that presents an opportunity in that space.

Moving onto the ICT sector in particular, Ghana is one of the biggest markets for MTN Group in terms of the number of subscribers, could you summarise the particularities of Ghana’s ICT telecom industry?

Earlier on I mentioned the penetration level, which is very important. Ghana has a penetration of over 100% for voice. When you come to data, the penetration is still below 70%, so that presents an opportunity in that space. The industry is currently run by about five or six GSM players for voice or GSM, but in addition you also have three 4G license operators. We have a population of 25 million with about 9 players, so by any standards the market is highly competitive. As you would see, that is driving a lot of price competition in the market, and very limited differentiation on service. Again that presents an opportunity in itself; our view as an industry and as a market leader is that we believe only about 3.5 operators are required for a market of our size. So competition aside, we believe that into the future, this industry will consolidate. The industry is also the number one contributor to national revenue. In fact MTN is the biggest contributor to the national revenue in terms of companies that pay taxes. We have won that award consistently for over three or four years now. If you look at MTN and the other players in the market and their importance to the economy, clearly you can also imagine the contribution that we are making. This is an industry that is not only there to serve customers, it is also an industry that delivers national interests as far as revenue mobilisation is concerned. In a nutshell that would be my description of the industry and how we expect it to evolve over time.

You said that given the number of players in the market differentiation is limited, but nevertheless how does MTN stand out? What is your competitive edge?

The biggest competitive edge that we have is the product differentiation that we have. That is where we have been able to maintain our market leadership. The second is the innovation that we drive. The third is the people that we have because this is a highly skilled industry driven by knowledge and creativity. That is where MTN makes a difference. When I introduce anything in the market it is not only price led; in an industry like ours where almost everything is automated it would take the competition no less than 2 days or one week to replicate it. However the difference is in the service offering for the product.

At MTN we believe that innovation is the bloodstream that drives the muscle of the business. So everything we do is driven by innovation; how can we do things differently in the market space and even within the organisation itself? We look at market innovation and we also look at process and operational innovation. Almost every area of the market and the industry that you can look at, we lead in that stream. Whether it is the digital space, where you are looking at the new ways of doing things using ICT to drive consumer innovation, to drive consumer efficiency, to drive consumer lifestyle changes, we lead that stream. I talked about data, even though the penetration is lower than voice, we are leading that stream. Let’s consider mobile money: today, based on our understanding of the market we believe that if there is one service that will make a difference. It is mobile money. We keep saying that mobile money is not competing with any bank; instead it is competing with the use of cash itself. Such that somebody 500km away in a location where there are no banks, can now receive money and cash it right next door. Somebody in a location 1000km away can send money anywhere in Ghana with the speed of light, just like  sending an SMS the money  We have about 4.5 million customers for mobile money who have registered on our network, out of the network population of over 14 million that we have. This number keeps growing week on week, month on month. We want to drive this innovation to the point where mobile money becomes a key component of the business and its contribution in terms of subscriber base will be about 60% of our subscribers. When I talk about innovation it is backed by some practical example in every single segment that you can look at. We look at the segments in terms of the customers, how long they have stayed with us, their lifestyle, their consumer needs, what they do whether it is entertainment, sports, education, health etc. Anything that is relevant and important to my customer is important to me. I enable them through the use of ICT to live their life much better, faster and with more convenience than they would ordinarily do. That is the vision behind our innovation.

Apart from the mobile money services that you have launched are you considering launching any other products or services that you would like to mention?

We have the biggest service delivery platform in the country and in West Africa. On this service delivery platform I am happy to say that today MTN Ghana is the biggest distributor of music. This platform is able to take on any other innovation that we have much faster. With that platform we are doing a lot in the space of sports, for example football. Ghana is a football country as you may know. Anything football related is a national passion. We also want to make a difference in that segment. In the area of music there are many other music innovations that we will be doing, not only in terms of content but also variety. We also have our own platform called MTN Play; it is where almost all the action takes place. Having differentiated ourselves in these areas we also want to ensure that all these platforms are integrated with mobile money. So you can be anywhere in Ghana and be able to buy your content directly. You can also be in Ghana and be able to shop offshore using mobile money. Those are some of the innovations that we will be driving very soon. Today mobile money is typically a domestic business; tomorrow we are going into a space where mobile money will be international. With the help of agreements we will sign with external partners, you will be able to shop and use mobile money in Ghana as you typically do with your credit or debit card.

What about your CSR activities? What is your main focus?

The philosophy we have about CSR is very simple: we do well by doing business and by doing business we do well. The various fields that we do and the services that we deliver to our customers are done in a way to deliver well. I can use mobile money as an example. I can also talk about the coverage of my data network being the only company that has its data network available in all the districts and in all regions. I can talk about the voice coverage that we have, as we are even in areas where typically it may not make economic sense to deploy a network. If I am to assess the cost benefit per site purely on the basis of capital, I may close down some of the cell sites, but the majority are still there because of future growth of expectation. Apart from the normal business that we do and its CSR impact, we also have a stand-alone organisation under the MTN Foundation where 1% of our profits after tax are dedicated to CSR initiatives. The main themes are education, economic empowerment and health. I could give you a whole catalogue of initiatives that we have delivered over time with that. The amount of money that we have spent on this so far is close to 19.5 million cedis and we are still spending. Nobody beats us, not only in this industry but also outside of this industry, in terms of the number of schools that have been built by MTN Ghana, the number of health facilities that we have invested in, whether it is the maternity ward at Korle Bu or the neonatal ward in Tamale, nobody beats us in terms of the scholarship scheme that we provide etc. So the number of individuals that we touch directly or indirectly through our CSR initiatives is about 3 million people out of a population of 25 million.

CSR at MTN is about everything we do. Relationships are part of our core value as well as ‘can do’.  We aim to not only use the MTN brand in terms of the services that we provide but also use it to promote social good and help people take inspiration from what we do, so that they can say if MTN has been able to do this then we can also. That speaks directly to the CSR initiatives that we have. Another important aspect is integrity. That is why we decided that apart from the commercial business that we have that we should have an independent business responsible for CSR and dedicate 1% of our profits to it and visibly audit it. It also has its own board of directors that is different from the commercial side. That way we are not tempted to say ‘ok business is difficult so let’s cut back on the CSR budget’. Today as soon as we declare our profits, the board under the MTN Foundation know that 1% is coming to them and they drive the agenda in terms of the projects that they are going to support so that those projects have nothing to do with the commercial projects. Leadership is another factor; we want to lead the way in everything we do. Our values speak directly to the commercial business and also directly to the Foundation.

Lastly, you are the first Ghanaian CEO for MTN Ghana, what is your personal vision for the company?

MTN is a big business; it has done a lot of great things in this country over the years. MTN impacts on more than 14 million Ghanaians every single day. I am not taking the impact of MTN for granted at all. With everything that I do, I need to bear in mind the bigger impact of MTN. If I have a vision it is simply to have two hats, as a Ghanaian and having a hat for MTN, making sure that this business drives in a way not only to grow and to generate economic benefits for MTN but also to grow and generate economic benefits for Ghana.

How do we work together for a better impact socially, economically, and commercially? Those are the three big anchors of my vision. How can we do that so that all the customers benefit a great deal? The great people behind MTN are the staff. I need to look at how I can drive the business agenda so that it will generate enough commercial outcomes to meet their individual career aspirations. That is a big mandate that I have. The other mandate I have apart from satisfying the shareholders’ interests is how can I meet the community interests and requirements? That refers to the CSR initiatives we were talking about. At the end of the day, when I finish serving my term, it is not just about how many customers I managed to add to the network, which is obviously very important, and not only about the amount of profits that we contributed to, but it is also about how many lives we have touched during my term. That is what will make my day when I finish my term here at MTN Ghana.