Business News of 2013-03-15

MTN Ghana pays GHC448 million tax in 2012

Ghana’s mobile cellular market leader, MTN Ghana paid a whopping GHC448million in taxes to Ghana government in 2012, which represents about 30% of its total revenue of GHC1.5 billion it made last year.

MTN Ghana CEO, Michael Ikpoki, who announced this at the annual MTN Ghana Editors Forum in Accra, described the company’s 2012 revenue, which was 21.5% higher than that of the previous year, as very impressive, but a greater chunk of it went into expenses, leaving the company with only 15% as profit.

He said 15% of the revenue went to pay for interconnect cost, which is what MTN pays to other telcos for all MTN calls that terminated on those networks. Meanwhile, 20% of MTN’s total revenue also came from what other telcos paid to it as interconnect gains.

Michael Ikpoki said another 15% of its revenue was spent on network rollout, 11% on rentals and utilities, 10% for paying dealer commissions, another 10% for events, branding, sponsorships, stakeholder engagements, and fees for 45 media agencies.

“Another 7% went into paying income taxes, 6% for wages and salaries, 5% as VAS agents’ share of the partnerships with them, 3% for maintenance and transmissions and another 3% for regulator fees like National Communication Authority (NCA), Ghana Investment Fund for Electronic Communication (GIFEC) and others,” he said.

In total the expenses came to 85% of the revenue, meaning MTN was left with 15% as profit, which is GHC225million (US$117 million).

Michael Ikpoki noted that the erroneous impression in the public that telcos are making huge profits and are shipping moneys out of Ghana on weekly basis is unfounded because, even though MTN finished the year with US$117million profit, the MTN Group has approved US$124million as capital expenditure in Ghana for 2013.

This he said, is beside other operational expenses that would come with the dynamics of the year, such as fuel price increase, and utility price increase, which threatens to add some GHC6million to its operational costs this year.

He said out the approved US$124 million capital expenditure, MTN has earmarked a whopping US$105million to spend on services, products and activities that would go to specifically impact customer experience on the network.

The MTN Ghana CEO said at the group level, the company has changed its vision from seeking to be the leading mobile network in emerging markets to being the ‘leader in delivery of bold new digital world to customers’ across its 22 operations, most of which it is either number one or number in the market.

“At MTN we believe mobile technology is not just about making calls and sending SMS, but about empowering and enabling our customers to achieve their life’s goals and giving them a brighter life by providing innovative products and services that enhances their lives,” he said.

Michael Ikpoki noted MTN’s contribution to national development cannot be overemphasized as it goes beyond the taxes and investments it is committed to making in Ghana.

He noted that currently MTN has about 1,000 direct employees, 1,600 on contract, nine regional distributors (all of which employ more people), 200 sub-distributors, 250,000 retailers, 500 local agents, 800 direct sales agents, 219 distributor branches, 575 customer care agents and 77 customer care centres across the country.

The MTN Ghana CEO the company has 2,100 cell sites, out of which 800 are 3G sites, but that would be increased to 1,018 this year, and 229 of them would be co-located, plus 600km of additional fibre would be laid to augment existing stock to improve service.

“We would also be rolling out service on our 5.2terabite/sec WACS cable in which we have so far invested some US$90million,” he said.

He said in the area of Corporate Social Responsibility, the MTN Ghana Foundation also committed millions of Ghana cedis to provide ICT centres, classroom buildings, several social amenities and health facilities across the the country, adding that this year it would be focusing more on economic empowerment projects.

But Michael Ikpoki however noted that whereas MTN and the other telcos have showed commitment to helping the country develop, there were challenges that threaten the sustainability of the industry.

He mentioned some the challenges as multi-simming, which affects the revenue share of telcos, high utility rates and fuel costs in the face of low inflation in the telecoms sector, fibre cuts, delay in obtaining permits to install infrastructure to provide service, the fluctuating exchange rate between the dollar and the cedi, high and multiple taxes and charges, and others which threaten the profitability of telcos.

“We can keep increasing the tax burden of telcos and raising their operational cost but with it that burden will begin to have an impact on the telcos and that would not be good for the country,” he said.

He therefore appealed to the media to raise the issues affecting the industry with the view to helping to shape policy in a way that benefits all stakeholders, including government and consumers.