AirtelTigo has gone through real turbulence in the last few years, but to still hold and serve 3 million customers is an amazing story. What seem to have hit AirtelTigo the hardest is the recent roaming on Telecel cell sites when the towerco vendor, ATC, decided to shut down its cell sites that serve AirtelTigo.
While addressing AirtelTigo staff, the sector minister hailed the staff for the seamless job that was executed in record time to move the affected customers onto the Telecel network.
In the meeting, the Minister accidentally hinted a merger of the two entities as AirtelTigo was already roaming on Telecel. Nonetheless, a subsequent press engagement with the Minister clarified that the said merger was rather a Force Majeure, which does not explicitly make it a merger.
KPMG has since been contracted to review the entire investment and merger opportunities to advise government on the way forward.
The Telecom Industry in Ghana has seen some of the unpredictable happenings over the last 33 years when the first mobile telecommunications network, Mobitel (Now AirtelTigo) was launched.
We’ve seen several transitions of some operations, takeovers of some operations, and even a merger, which was the first of its kind in Africa. All these happenings are in attempts to serve the customer well and make good ROIs for shareholders.
We’ve seen global telecom operators like Vodafone, Airtel, and Millicom, who couldn’t survive the unique Ghanaian market, while MTN continues to thrive with a better understanding of Africa’s nuances.
“My experience in this industry tells me that you can’t just use a global strategy to attain local success. It doesn’t always work.” One gentleman said.
“For Example, while mobile money presented itself as a solution that Africans were ready to jump on, Millicom Ghana (Tigo) ignored that local nuances and rather channeled its efforts into building a music brand, TigoMusic. This was a typical global strategy that failed to gain local relevance.” He continued.
The current conversation about the telecom industry is very critical to Ghana and its citizens, especially as telecom serves over 90% of the population with connectivity (calls, Internet, money transfers).
A Merger
The country saw its first merger with Airtel and Tigo about 8 years ago. The “strategic” marriage between Bharti and Millicom, both with remarkable global presence and well-thought through plans and arrangements could not achieve its objectives and had to leave Ghana.
Today, conversations about a second merger is being entertained by the same government that was in power when the first merger conversation started.
Also, a merger brings Ghana to a duo poly which is not an industry best practice even though some countries with strong regulations are entertaining a two-player market.
Commenting on the Airtel and Tigo merger, the gentleman said, “I was very close to the first merger and I saw what happened. I can boldly say one plus one without the right investment can actually become less than one.”
“I’m not sure Telecel has the right investment, and even if they do, they must put that into their own network while AirtelTigo also uses the proposed external investments to turn its operations around.” He added.
Telecel promised $500m investment in first three years upon acquiring Vodafone, but we are yet to confirm how much of that investment has been pumped into the business after taking over two years ago.
A New Investor
AirtelTigo has seen bold attempts from two investors who are ready to make it a profitable business, regardless of how deep it has fallen. Hannam Investments signed an agreement with the previous government in 2023, while Rektron signed with the current government this year.
However, Rektron has come out to question the move by government to merge AirtelTigo with Telecel, which shows how committed they are to this agreement. This commitment is entrenched in Rektron’s initial $150m and a proposed $1b in five years, making it the biggest investment AirtelTigo has seen in the last 10 years.
“Telecom operation is capital intensive. What Ghana needs is not just a merger, but good investments that can revive AirtelTigo to become profitable.” Another gentleman added.
Opportunities and Risks
The biggest opportunity is the quality of employees that sit at AirtelTigo and the work they have done to keep the business alive regardless of all the odds that are against them. From the days of Mobitel, Buzz, Tigo, till today, Ghana has seen some of the brilliant telecom professionals emerging from the first mobile telecommunications company in Ghana, AirtelTigo.
The staff have been very instrumental in various technical telecom deployments even with its end-of-life systems, as the sector Minister puts it.
Rektron’s $1b investment over five years is a rare opportunity that can outrightly stabilise and propel AirtelTigo, considering the highly praised employees.
Even though a merger cannot be totally written off, it poses a bigger risk than the said investment from Rektron.
