Why AirtelTigo is exiting Ghana as the government takes over with US$25 million

Following the announcement of AirtelTigo’s departure from the Ghanaian market in October of 2020, The Minister of Communication on behalf of the Government of Ghana has signed an agreement with AirtelTigo through their representatives (Jatina Catharina Uneken-van de Vreede, Martin P Frechette, Timothy Pennington, Eric Nana Nipah, and Vish Ashiagbor), for transfer of ownership of the telecommunications company to the state.

The Indian telecom giant Bharti Airtel and Swedish telecommunications company, Millicom, which merged to form AirttelTigo in 2017 is selling 100% shares of its Ghana business for $25 million to the Government of Ghana (GoG), which will acquire customers, assets, and agreed liabilities.

AirtelTigo Acquisition

“The Government of Ghana, Bharti Airtel, and Millicom International Cellular, through their respective subsidiaries, today announced they have executed the definitive agreement for the transfer of AirtelTigo to the Ghana government on a going concern basis,” Bharti Airtel said in an official statement Friday.

“The unsustainable non controlled JV will be handed to the GoG, who are committed to reviving the company making suitable investments etc., and operate the company while protecting the interests of the customers, employees of the company, and all other stakeholders. The transaction is subject to closing of the mutually agreed conditions and Airtel and Millicom along with GoG will expeditiously complete the closing,” The company further stated.

According to the Minister of Communication, Ursula Owusu, the government considers “this a positive step as it adds to the growing portfolio of digital infrastructure assets being utilized by the government.”
“Government will operate this national asset in the best interest of the nation, the company, telecommunications industry, and ensure the protection of the interests of all employees, customers, contractors, suppliers, stakeholders and sustain the digital transformation of Ghana,” she further said.

Reasons for the departure of AirtelTigo

Airtel had previously made it known that it would take a look at consolidation opportunities, including an exit, in markets where it is not among the top two players. That being said, with MTN being the dominant telecommunication player followed by Vodafone, it appears AirtelTigo is living up to its words. 

According to Techpoint Africa with 23.9 million voice subscriptions, MTN Ghana controls 57% of the subscriber market share in Ghana, far ahead of Vodafone, AirtelTigo, and Glo at 21.97%, 20.3%, and 1.75% respectively. MTN also enjoys 67% of the country’s data market and currently leads the country’s fast-growing mobile money sector.

The dominance of MTN on the Ghanaian scene led the National Communication Authority to declare MTN a Significant Market Power and introduce corrective measures that will encourage favourable competition and consumer protection in the sector.

Also, AritelTigo’s financial performance was said to be an area of concern for the company as expenses kept rising, creating a high cost-to-income ratio.
Bharti Airtel’s Africa operations posted an 8.8% year-on-year drop in net profit to $88 million in the quarter ended September 2020 due to higher expenses. However, consolidated revenue stood at $965 million, increasing 14.3% from the corresponding quarter last year.

A chunk of the company’s income is said to come from Nigeria where it is the second-largest mobile service provider.

Leave A Comment