Another matter that has preoccupied my thoughts a great deal lately is the government’s continuous involvement in Telecel through a golden share of 30%; prior to the merger of Airtel and Tigo into AT, the government had similar “golden” stakes in both companies, never mind that AT is currently 100% owned by the government after the “big pull out” of telecom investments from Ghana recently.
In our part of the world, private companies, driven by competition and profit, are generally more strategic, innovative, and customer-focused than those led/run by governments. Government, by providing proper regulation in the industry, can ensure fair competition, consumer protection, and the availability of business support programs, while allowing private companies to handle the actual operation of the business of telecommunications. This separation ensures better services and choices for consumers, not to mention a more dynamic and responsive industry that creates wealth and benefits all stakeholders.
Our government has no legitimate business in the telecommunication sector beyond regulations. Its focus must be on creating the enabling environment for private investments to thrive rather than directly participating and competing in mobile telecommunications. The only space a government in our unique circumstances should be involved in is internet connectivity, that’s a different discussion we’d have when I wade into broadband policy and net neutrality in the context of bridging the digital divide.
The policy on golden shares, as applied to the telecommunications market in Ghana in the wake of market deregulation gave the Government of Ghana special pre-emptive rights relative to other shareholders in these telecoms companies as a strategy to help it maintain control and protect national and economic interests, aside from ensuring that services from these companies remained accessible, affordable and reliable.
More importantly, the golden share was designed to prevent any group of foreign investors from ‘capturing’ disproportionate influence over a national security resource vital to the country in the early stages of opening up the telecom market.
The spirit and letter of our current electronic communication laws which came into force in 2008, ensured that compliance with these statutes, regulations and related policies was enough to exert the “control” that the government needed to serve the common good via the “golden share principle”. It even allowed the sector Minister the power to make directives to the agencies it supervised, directives that ‘must’ be complied with, according to law, to intervene in matters of national interest and market equilibrium.
The continuous involvement of the government as both a player (participant) and regulator in the sector, more than 15 years down the line raises several concerns and potential issues. While such involvement can be justified in limited situations or during crises, it must only be a short-term undertaking to achieve specific results, as such any such interventions should be carefully weighed and balanced.
The risks of potential regulatory capture, conflict of interest and corruption, selective application of the law, stifled competition, and reduced innovation are significant impacts with long-term negative effects on the industry and the broader economy. Ensuring openness, transparency, accountability, and clear boundaries between regulation and participation is essential to de-risk business in the sector.
On account of the above, I opine that in practice, the regime of the golden share should have been over in 2008, or immediately after the coming into force of our electronic Communications and related laws (Act 769, 771, and 772). The import of this is the government must propose forward-looking policies and regulations to govern telecommunications to cease being a player and umpire.
I will propose that the government after laying out policies that close the yawning regulatory gaps (I might have to dedicate another writeup to this) must then sell off its golden share to Ghanaians living in Ghana openly on the stock exchange, enjoining all existing and future players in the market to be listed on the stock market as a regulatory requirement. The benefits of listing these Telcos on the stock exchange aside from growing the local index, are to breathe more confidence into the industry and allow these businesses to easily access equity or debt financing (or both) for capital investment into projects, acquisition of newer technologies, research & development among others. This arrangement will undoubtedly promote good corporate governance and corporate citizenship, more than exists currently. It will also help these businesses stay competitive and more relevant in the market.
In my next write-up, I will lay out what I believe a forward-looking regulatory regime must look like for our telecom sector to thrive better. For now, let’s keep the telecom conversation alive.