Vodafone Ghana: LTE Too Expensive to Roll Out Now

Vodafone Ghana: LTE Too Expensive to Roll Out Now

Vodafone Ghana says it is in no hurry to roll out 4G/LTE services, citing the poor penetration of 4G-enabled gadgets and unfavorable market conditions generally, according to a report. Vodafone CEO Yolanda Zoleka Cuba said that despite the many advantages of LTE, the company views the high-speed network technology as a long-term venture, since only 1 percent of the population have 4G-enabled devices. Cuba further stated that the low penetration makes it very difficult to justify the US $67.5 million 4G license fee required by the country’s National Communications Authority.

Tarifica’s Take

Device penetration has always been the Achilles heel for LTE adoption. In chronicling the spread of high-speed networks, we have frequently noted in these pages that the revenue potential of LTE networks—and in many cases, indeed, their success or failure—depends on how much of the customer base either has LTE-enabled handsets or can be induced to purchase them. The spread of budget-priced smartphones worldwide has made it a viable option for operators to incentivize customers to make their first purchase of an LTE-enabled phone. However, in the present case, Vodafone Ghana has decided that LTE-enabled device penetration in the country is simply too low (at 1 percent) to justify the expense needed to roll out the corresponding services.

However, there is another side to the question. Despite the very low uptake of LTE-compatible devices, there are some encouraging trends in the Ghanaian market. Mobile data use is on the rise, with the total number of subscribers at 18.75 million at the end of May and a total penetration rate of 67.67 percent, according to the National Communications Authority. Vodafone’s larger competitor MTN (which has 49.54 percent market share as compared with Vodafone’s 17.82 percent) has already begun to offer 4G/LTE, despite the lack of subscriber base, in partnership with Ericsson. Vodafone CEO Cuba has said that Vodafone cannot compete with MTN in this sector, and apparently, neither can rival operators Airtel, Tigo, Glo or Expresso. At this point, only the market leader can afford to experiment with LTE, but the fact that it has taken the step bodes guardedly well for the market’s future—albeit that future is still a quite a way off.