Ghana’s Minister for Communication and Digitalization, Ursula Owusu-Ekuful, has acknowledged that the demise of broadband service providers in the country can be traced back to the steep fees for 4G spectrum licenses, which favored mobile service giants like MTN. In an exclusive interview with “Bernard Avle on the Citi Breakfast Show” on Citi FM, Owusu-Ekuful highlighted how the auction of 4G spectrum primarily to cash-rich mobile networks created an uneven playing field for new broadband operators.
“The collapse of broadband service providers like Surfline can be attributed to the 2015 decision to auction the 4G spectrum primarily to mobile networks, particularly MTN,” Owusu-Ekuful stated. “The auction essentially disadvantaged local broadband operators. Government initially allocated spectrum to local operators for broadband services under the assurance of exclusivity in that domain. Meanwhile, mobile networks were to procure data services from these broadband operators if they wished to offer such services to their subscribers.”
She continued, “Despite pledging exclusivity to the broadband operators, we later auctioned the 4G spectrum to the same major players, which MTN capitalized on due to its superior financial capability. This move allowed MTN to dominate the high-speed data market, leading to the exit of other operators.”
Owusu-Ekuful also mentioned ongoing efforts to support affected operators like Surfline and Blue Broadband to ensure their sustainability in the market.
Meanwhile, the issue of expensive spectrum fees remains contentious across Africa. In Nigeria, for instance, the Nigerian Communications Commission (NCC) generated significant revenue from spectrum licenses awarded to telecom giants like MTN, including fees for the rollout of 5G networks. Despite MTN’s investments, of over $394 million into 5G, total 5G connections have stalled at 2.3 million in December 2023, representing 1.04% of the country’s total active subscriptions for telephone services. This revenue generation, while beneficial for governments, poses challenges to the digital growth and competitiveness of local operators.
Governments and pressure groups often view telecom operators merely as cash cows, subjecting them to frequent punitive measures like license terminations, denying access to cell towers, and even resorting to ransom demands for digital infrastructure.
Disputes over spectrum usage further complicate the landscape. In South Africa, Vodacom’s legal challenge against MTN regarding spectrum pooling arrangements underscores the competitive disadvantages faced by some operators due to regulatory decisions.
As governments grapple with balancing revenue needs and fostering digital growth, the heavy financial burdens imposed on operators through licensing fees risk hindering infrastructure development. With Africa currently possessing minimal global share in data centers (1% of the world’s data centers is in Africa) and fiber networks (Africa has 0.024% of the world’s fiber networks), there is a pressing need to rethink regulatory approaches. Enabling operators to invest more in digital infrastructure could unlock significant economic opportunities and drive sustainable growth across the continent.
