Sources close to the Tigo-Airtel merger deal in Ghana have hinted that the main actors in the deal will present the details to National Communications Authority (NCA) this week and subsequently seek their approval.
Millicom International Cellular SA and Bharti Airtel last week announced the consolidation of their operations in Ghana but stated the merger is yet to get government and the regulator’s approval before it could take effect.
“At this stage we have to wait for the approval of the NCA before we can decide what phone number prefix we will use and where the headquarters will be – until then, Tigo Ghana and Airtel Ghana remain separate entities and are still in competition with each other,” an insider told Adom News.
Millicom owns Tigo Ghana while Bharti owns Airtel Ghana, and the two last week announced a merger of their respective Ghana operations in a 50-50 arrangement.
This came after scanty information about the intended merger and an eventual take-over by French telecoms giant, Orange had leaked more than one year ago but both Airtel Ghana and Tigo Ghana officials had remained tight-lipped on the matter for about two years.
Bharti Airtel Chairman, Sunil Bharti Mittal had recently hinted in an interview that Bharti was in the processing of cutting down its operations and presence in Africa and 14 countries, including Ghana, was going to be affected.
Mittal cited losses in hundreds of millions of dollars incurred in Africa between 2015 and 2016 as part of the reasons for the intended cut billed to be carried out over a one-year period to reduce the company’s global debt to a targeted US$12 billion.
Following media reports of this comment by the global Chairman of the company, Airtel Africa issued a statement to deny Airtel was leaving Africa.
This merger announcement, however, comes as a confirmation that the rumors had always been true, except the second part of the puzzle, which is the takeover by Orange is yet to be confirmed by the two parties.
Synergies
The combination of the two entities aims to bring together the strengths of both companies to boost their market positions and place them to better serve customers in Ghana.
Currently, Tigo is number three on the market with 5.4million customers, and Airtel is number four with 4.7 million subscribers. But together they will shoot straight to number two, provided customers don’t jump ship out of panic, and that will drop Vodafone to number three on the market.
In terms of what kind of synergies are envisaged, the key ones include the following:
Revenue synergies – with a bigger customer base, the two hopes to drive voice value and accelerate data growth.
Network synergies – sharing infrastructure and spectrum would enable a more effective and efficient network investment in 3G and possibly in 4G.
The commercial synergies include advertising spend and distribution presence.
Customer benefits
The two telcos believe consolidation will lead to greater industry stability, better quality of service through continued investments in the sector, and the introduction of more innovative services for customer benefits.
They think consolidation is good news for customers who would get improved coverage, improved customer experience and a bigger combined network of customers.
The customer would also benefit from a state of the art network with high-speed mobile data coverage as well as innovative and competitively priced services.
With the combined fibre footprint and increased Data Centres, Enterprise customers including both large corporations and SMEs would also have access to a diverse portfolio of world-class solutions.
Meanwhile, Mobile Financial Services would also be greatly enhanced with combined agent networks and platforms.
Industry observers
But some industry watchers and customers are still wondering what the name of the new company would be, what network code they would opt for, whether Airtel’s 026/056 or Tigo’s 027/057, and what happens to customers who use both Airtel and Tigo?
Others also believe the perceived benefits of the new company on the basis of economies of scale is only theoretical because in reality that will take some time to achieve.
“Even if it reduces their costs a bit, there is still all those taxes and fees to deal with,” they noted.
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