Ghana to Stabilize AirtelTigo After Buying Operator For $1
Ghana will provide funding to the mobile operator it bought for $1 in a bid to reach profitability within two years.
AirtelTigo, now fully owned by the government, will receive “bridge financing” this year, Minister of Communications and Digitalization Ursula Owusu-Ekuful said in an interview in the capital, Accra. The amount is still being discussed.
The West African nation is also considering giving a sovereign guarantee to help the service provider secure funds from other lenders, she said.
Ghana acquired AirtelTigo this month from Bharti Airtel Ltd. and Millicom International Cellular SA, which had combined their local operations in 2017. The third-largest mobile operator, with 20.1% of the country’s voice subscribers by December, has been vying for second place with Vodafone Group Plc’s local unit that controlled 20.8% market share at the same period.
Lagos-based Globacom Ltd. has the remaining 2% of subscriptions.
The government is renegotiating some of the company’s short-term loans after its former shareholders wrote off the debt they were owed. “Once we create some space for the company it will be able to stand on its own feet,” she said. “This could take up to two years.”
Some of the debt was incurred trying to keep up with the competition. Unlike its two main rivals, AirtelTigo hasn’t acquired a 4G license for instance, putting it at a clear disadvantage, she said.
Ghana has taken a proactive interest in the sector, clashing with market leader MTN Group Ltd. over its dominance even after successfully pushing for a local listing of the unit. The National Communications Authority compelled MTN, with 57.2% of subscribers as at the end of December, to cut the interconnect fee it charges for calls to non-MTN numbers by 30% for a two-year period, a move aimed at reducing its market dominance.
There needs to be a “market correction so that they don’t get any undue advantage,” Owusu-Ekuful said, with smaller players saying they’re already “getting more space within which to operate.”
Vodafone was also considering options for its Ghanaian unit in January, Bloomberg reported at the time, including the possible sale of its majority stake. Owusu-Ekuful said she isn’t aware of such plans. The government, which owns 30% of the subsidiary, would get the right of first refusal if the British operator wanted to sell, she said.
In a boost to the country’s tech profile, Twitter Inc. announced this month it was expanding into Ghana, where it’s building its first product and engineering team in Africa. This comes after Google parent Alphabet Inc. opened its first Africa-based Artificial Intelligence research center in Accra in 2019.
“Other global giants may be interested to know what Twitter saw in Ghana and want to explore the possibility of also following in their footsteps,” Owusu-Ekuful said.
©2021 Bloomberg L.P.