MTN’s huge market share 'unhealthy'- Communications Minister

The Minister of Communications, Ursula Owusu-Ekuful has welcomed an Accra High Court ruling, dismissing the case brought before it by telecoms giant MTN, seeking to quash the National Communication Authority’s move to classify the telecommunications industry as a Significant Market Player (SMP),

This ruling thus paves way for the NCA to take measures to promote competition in the telecoms industry and protect the interest of other sector players.

Commenting on the significance of the ruling, on the sidelines of the re-launch of the COVID-19 tracker app yesterday, the Minister described as “unhealthy” the huge share of the market that MTN wields.

“It is not healthy and that is why the telecoms policy has made provision that any operator that has more than 40% of the market is likely to be declared as dominant and corrective measures will kick in. It is not healthy”

Explaining the need for the Authority to take the needed measures to regulate the market in accordance with the laws of the land, Owusu-Ekuful said, “We need to be in the position to also ensure that no jobs are lost, and no livelihoods are lost and that we are not overly exposed to one operator, who may decide tomorrow that it does not want to operate in Ghana anymore, and is pulling out of Ghana and if it holds 70% of all our telecoms traffic, that means if it leaves, our entire economy is grinding to a halt, since we are using the telecommunications infrastructure to deliver online services in all aspects of our socioeconomic lives currently.”

She explained that due to the outbreak of the coronavirus pandemic, multinational companies are reviewing their investment strategies around the world, and it was therefore critical that the telecoms industry be made resilient in order for the economy to be able to withstand any headwinds such shocks to the crucial sector may bring the nation’s way.

She replied some critics of the move who have said that MTN is being punished for deploying a successful strategy, saying, “Nobody is seeking to punish MTN for its success, but some of its practices are not helping the development of the industry. They need to work with the regulator and other operators to ensure that we create an even playing field for all of them to succeed.”

Ghana Telecom (which is now Vodafone) was once declared SNP for voice telephony. Today, it is MTN that is being declared as an SMP. Tomorrow it could be AirtelTigo, I don’t know,” she stated.

She justified the need for there to be an even playing field for all actors in the industry, saying, “We need to create the opportunity for all of them to succeed so that we have a vibrant market which respects the investments made by all actors and is attractive for foreign direct investment into the sector. It is capital intensive so if you’re putting money in and not getting anything out, it becomes difficult for you to sustain the investment.”

She emphasized government’s commitment to do its work and will not bow to the dictates of industry players, especially when government and its agencies are seized with the legitimate power in the laws of the land.

She urged MTN and the regulator to quickly complete the process that was started prior to the court case to get the impasse resolved as quickly as possible.

MTN went to court with a judicial review application urging the court to quash the NCA’s decision with an argument that the regulator failed to give it a hearing before classifying it as an SMP.

The NCA, however, insisted in its affidavit in opposition to the application that at all material times, MTN was aware and participated in the process that led to it being classified as an SMP.

SMP classification

Pursuant to Section 20 (10) of the Electronic Communications Act, 2008 (Act 775), on June 9, this year, the NCA classified MTN as an SMP after the regulator determined that the mobile network operator controlled more than 57 percent of the voice market share, as well as more than 67 percent of the data market share.

Act 775 allows the NCA to take “corrective measures” against an SMP in order to promote competition and protect other mobile network operators and consumers.

In view of that, the NCA decided to “review and approve all charges by MTN”, set caps on what MTN can charge for its services, and also impose a 30 percent interconnect rate for two years in favour of other “disadvantaged operators.”

MTN’s case

In an affidavit in support of the motion for judicial review deposed by Mr Serlom Adadevoh, the CEO of MTN Ghana, the company averred that the “failure of NCA” to give it hearing was a violation of the rules of natural justice, as well as Section 25 of the National Communications Act, 2008 (Act 769) which enjoins the NCA to “observe reasonable standards of procedural fairness.”

According to MTN, the “failure of the respondent (NCA)” to give it a hearing renders the SMP classification null and void.

“The respondent (NCA) by not giving applicant (MTN) a hearing prevented respondent from making an informed decision, in that application was denied and prevented from making any submission before the decision to declare it an SMP was made,” it said.

The mobile network operator, therefore, wanted an order of certiorari from the court quashing the decision of the NCA to classify it as an SMP.

Also, MTN sought an order of prohibition restraining the NCA from implementing the decision to classify it as an SMP and also circulating the decision.

NCA’s opposition

In its affidavit in opposition, the NCA argued that the classification of MTN as an SMP was in compliance with Act 775.

It was the contention of the NCA that it had fulfilled all the requirements under Section 20 (13) of Act 775 including the gazette notification dated June 9, this year.

Also, the NCA said it had adequately engaged MTN on the implementation of its new status as an SMP.

Again, the regulator argued that the process leading to MTN being classified as an SMP started in 2014 when the NCA held discussions with all mobile network operators (MNOs) on regulation of competition in the telecommunication sector.

According to the affidavit in opposition, pursuant to the engagement with the MNOs and in order to gather adequate information, the NCA, in November 2015, hired a global telecom consultancy firm known as Analyses Mason, to “undertake a study to determine whether any particular operator was a SMP.”

“The said study had the participation of the applicant Scancom PLC (MTN Ghana) at all material times. It is therefore untrue for the applicant to claim that it had not been heard in the process,” the affidavit in opposition contended.

It was the case of the NCA that the study by the consultant identified MTN as an SMP with more than 46 percent of the telecommunication market share as of 2014.

Armed with that information, the NCA said in October, 2019, it commenced another study by engaging the MNOs and using information supplied by them, which again confirmed MTN as an SMP.