Assessment of Post Privatisation Perfomance of Ghana Telecom
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Date
2003
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Abstract
The global telecommunications services before the turn of the 1980-decade were supplied on monopolistic basis. In most of the developed countries, the monopoly was basically run by an administration or state-owned enterprise, while few countries opted for the system of issuing licenses to private state monopolies on a territorial or functional basis (ITU, 1995).
However, during the 1980s a wave of reform swept through the global sector. The reform included the privatisation of national companies either through share floatation or to strategic investors. In addition, there was a general opening of opportunities for private investments in different segments of the telecom market. Besides privatisation, the reform introduced liberalisation, which sought to remove restrictions on competitive entry to allow many operators to provide services to the general public.
In Ghana, the Ministry of Transport and Telecommunications launched an Accelerated Development Programme (ADP) in 1994. The programme aimed at increasing the quality and quantity of telecommunication services in Ghana and encouraging private sector participation in the development of the telecommunication infrastructure. At the time, teledensity was only 0.44 and the main provider of telecommunication services was the state-run Posts and Telecommunications Corporation, supported by two mobile operators.
The ADP involved the privatisation of the state-run operator and the licensing of a second national operator.
The main focus of this study is to assess the performance of GT after its privatisation and the liberalisation of the telecommunication sector. The study revealed a number of important issues.
First, it was observed from the study that, the privatisation of GT five years ago brought about some level of expansion and modernisation in telecom services in Ghana. For instance, the number of fixed telephone lines increased from 77,886 in 1996 to over 240,000 at the end of 2001 with teledensity increasing from 0.44 to about 2.31. At the same time, the number of payphones also increased from 453 in 1996 to 4067 at the end of 2001. The company also modernised most of its equipment and facilities by changing the analogue switching and transmission facilities and replacing them with digital ones. A new billing system was also put in place to facilitate the processing of bills, and most of the office equipment was changed. There was increase in staff from 3443 in 1996 to 3959 by the appointment of young degree and diploma holders by the end of 2001. Within 2 years of privatisation, the onetime government subvented organisation has become so vibram and rated number 5 in the rankings of the Ghana Top 100 Companies Club (GC100).
Nevertheless, GT’s performance fell below its contractual targets. At the time of privatisation, the government set targets for the strategic investor G-Com led by Telekom Malaysia on installation of Direct Exchange Lines (DELs) and Payphones. Targets were also set for service quality including Fault Incidence Rate, Fault Restoration Rate and Call Completion Rates. For not being able to achieve the contractual targets, the government failed to renew the Exclusivity Deal and the Technical and Consultancy Services Agreement with G-Com at the end of the contractual period.
The study assessed the level of achievement of the targets, and examined the reasons for non-attainment of all the targets. These were done based on available information gathered from various source. However in order to make an independent assessment of the company’s performance, opinion tests were conducted to investigate customers’ perception.
These tests revealed that, besides Call Completion Rate, where customers do not notice any significant difference, on all other criteria of performance they perceived that post privatisation performance of GT is better than preprivatisation performance. The researcher, upon the major findings from the study made two major categories of policy recommendations, viz: for management of GT, and for the government. The recommendations to GT’s management include: the need to strengthen GT’s financial position by expanding the use of pre-paid car ad introducing up-front payment scheme, and the need to ‘auto-bar’ the switches to enable on-line billing and setting credit limits to be done automatically. The recommendations to the government also include: the listing of GT’s shares at the stock exchange, as a permanent source of funding for the company, the transfer of technology through the establishment of industries to manufacture cables and other maintenance equipment locally. It is hoped that these will help improve the performance of GT and ultimately expand telecommunication services in the country.
Description
A thesis submitted to the Department of Economics and Industrial Management, Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfilment of the requirements for the degree of Master of Arts in Industrial Management.