Internet Service Providers face demise

The internet service providers operating in the country are currently facing tough competition from the telecommunication companies as the telcos have now moved towards service provision thus beginning to look like giant internet service providers.

With the telecos now pushing hard to take over the business of the ISPs, it is inevitable that there will be “forced permanent consolidation” as the war takes its toll on underfunded players.

“As data service provision becomes another battle turf, existing ISP’s need to begin assessing their strengths and preparing for this battle against giants that have awakened to the smell of a potentially lucrative businesses that has hitherto been dominated by local entrepreneurs,” said a telecom expert.

A cursory observation of Ghana’s leading ISP, Busy Internet, shows patronage has been falling in recent times compared to a couple of years earlier and analysts attribute the low patronage more to competition from the telcos rather than the proliferation of ISPs.

Economy Times has learnt that for the ISPs to have a chance of survival, smaller players need to consider voluntary consolidation through mergers and acquisitions (M&A) to bolster their balance sheets and allow them to possibly take advantage of economies of scale.

As Ghanaians are not known to work well together in a collaborative manner, corporate finance and M&A players could begin to untangle this debilitating culture and drive such transactions to raise the survivability of some local entrepreneurs.

ISP’s do not, as a matter of practice, restrict the use of their network. Once access fees are paid, ISP’s will allow unfettered passage to their customers to conduct business.

But the Ghana Internet Service Providers Association, GISPA has challenged assertions that they are losing out to competition from telecoms operators in the provision of internet service.

The Internet Service Providers, ISPs are said to be no more competitive because of their use of expensive and obsolete technology in providing internet service.

New policy rate out soon

The Monetary Policy Committee (MPC)made up of representatives from the Central Bank, Ministry of Finance and Economic Planning as well as the Securities and exchange Commission will this week commence the review of the health of the economy and announce a new policy rate for the next couple of months.

The policy rate is the rate at which banks borrow from the Central Bank as a last resort and also serves as a benchmark for the various banks in setting their respective base lending rates.

The policy rate is also used for controlling inflation, determining day-to-day liquidity operations, and for determining other market rates such Treasury Bills.

Economic chieftans believe that the Central Bank will, for this time, maintain the policy rate at 13.5 percent. If this happens, it means that interest rates in the country will be stable for the next couple of months.

The rate of Inflation for the month of July went up marginally to 9.5 percent from 9.4 percent in June figure.

This implies general prices of goods and services went up in July and the rate of increase was higher compared to the same period last year.

The monthly rate of change was however 0.7 percentage points lower than the June figure of 1.4 percent.

For the acting governor, Dr Henry Kofi Wampah, who currently doubles as the chairman of the MPC,it will be his first time to address the press and also respond to critical questions from the media.

The major concerns will still be the key measures that will be put in place to arrest the cedi from falling further.

The presentation will cover the country’s fiscal deficit, trade balance, and the movement ofinterest rates among others.

The Bank of Ghana last increased the policy rate from 12.5 percent to 13.5 percent. This represents an increase of 100 basis points. The increase was as a result of some unforeseen factors likely to impact government’s projections and threats to inflation.

Specifically, the pace of executing the budget in terms of arrears clearance, including those relating to the migration to the SSSS, and the recently announced increase in the minimum wage impose additional demand pressures.

The cedi started to depreciate when foreign investors sought early redemption of their investments on the domestic bond market.The situation was further aggravated in January 2012 by speculative activities of dealers and traders.