Boston, MA -- (SBWIRE) -- 10/23/2013 -- Ghana's telecoms operators have been penalised by the telecoms regulator in the last one year owing to poor quality of service. We expect this to drive investments in network infrastructure development to cope with the growing demand for voice and data services. However, we caution that the likelihood of tax increases on the sector would be a major disincentive for operators that are already hard-pressed by slowing revenue growth and rising operating expenses.

Key Data

- The Ghanaian mobile market grew by 3.9% q-o-q in Q213, compared to 3.3% in the previous quarter.
- Mobile ARPU contracted by 1.7% in Q213, reflecting continued fierce competition in the mobile market.
- The fixed-line market grew by 1% in Q113, maintaining the overall trend from 2012 of slow positive subscriptions growth in the fixed-line sector.

Risk/ Reward Ratings

Ghana drops one place to sixth position on BMI's Risk/Reward ratings table this quarter, behind South Africa, Nigeria, Angola, Gabon and Botswana. Ghana scores above the regional average in all four of our ratings categories. The country's lowest rating is in the Industry Rewards category where it is held back by increasing market saturation and strong downward pressure on ARPUs despite the rapid uptake of mobile data services. In July 2013, the government was forced to backtrack on plans to increases taxes some telecoms services. BMI notes the implementation of a similar policy in future could result in a downgrade to the country's Industry Risk score.

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Key Trends And Developments

Ghana's new internet service provider Surfline Communications, owned by Ghanaian Skybridge Investments, announced plans in August 2013 to develop Ghana's first commercial 4G LTE network. Surfline has contracted Alcatel-Lucent to build the network, which is scheduled to launch in Q114. Surfline intends to launch in the capital Accra, followed by other major cities and a nationwide roll-out. This development is in line with BMI's view that the increased availability of international bandwidth over submarine cable connections will improve the quality and lower the cost of broadband services in Ghana. We also believe Surfline's 4G network will provide much needed competition in Ghana's broadband sector.

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