Professional Documents
Culture Documents
1. INTRODUCTION……………………………………………………………..5
1.1 Telecom Industry In India…………………………………………………5
1.2 Government acts for regulation of telecom industry……………………..5
1.3 Telecom Network Services…………………………………………………6
1.4 Telecom Service Providers In India……………………………………….6
1.5 Current Situation In The Indian Telecom Market………………………7
1.6 GSM (Global System for Mobile Communications)…………………….7-9
2. COUNTRY PROFILE……………………………………………………...10
2.1 Ghana…………………………………………………………………….10
2.1.1 Economy……………………………………………………..........10
2.1.2 Key Industries In Ghana……………………………………….10-11
2.1.3 Key Statistics……………………………………………………..12
2.1.4 Geography………………………………………………………..12
2.1.5 Politics In Ghana…………………………………………………12
2.1.6 Culture In Ghana………………………………………………...13
2.1.7 Telecom Infrastructure And Technology In Ghana…………..14-17
2.1.8 Reforms In The Telecom Sector In Ghana……………………...18
2.1.9 GSM In Ghana…………………………………………………..18
2.1.10 Competition In Ghana…………………………………………...20
2.1.11 Reasons For Choosing Ghana……………………………………21
2.1.12 Future Of Telecom Industry In Ghana…………………………..23
2.1.13 Porter’s Diamond Applied to Ghana’s Telecom Industry………24
2.2 South Africa…………………………………………………………….25
2.2.1 Economy………………………………………………………….25
2.2.2 Key industries In South Africa…………………………………...25
2.2.3 Key Statistics……………………………………………………..26
2.2.4 Geography………………………………………………………..26
2.2.5 Politics In South Africa…………………………………………..27
2.2.6 Culture In South Africa…………………………………………..28
2.2.7 Infrastructure and Technology in South Africa…………………..28
2.2.8 Competition In South Africa……………………………………...29
2.2.9 Porter’s Diamond Applied to South Africa’s Telecom Industry….30
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2.3 Egypt……………………………………………………………31
2.3.1 Economy …………………………………………………31
2.3.2 Key Statistics……………………………………………..32
2.3.3 Geography………………………………………………..32
2.3.4 Politics……………………………………………………32
2.3.5 Infrastructure And Technology…………………………..33
2.3.6 Competition In Egypt…………………………………….34
2.3.7 Porter’s Diamond Applied to Egypt Telecom Industry….35
3. INTERNATIONAL MARKETING………………………………………36
3.1 Segmentation and Targeting……………………………………………36
3.1.1 Segmentation of the Ghanian Market……………………………..36
3.1.2 Target market in Ghana…………………………………………...36
3.1.3 Segmentation of the South African market………………………..37
3.1.4 Target Market in South Africa……………………………………37
3.1.5 Segmentation of the Egyptian market……………………………..38
3.1.6 Target Market……………………………………………………...38
3.2 Positioning Of The GSM Services In The Chosen Countries…………38
3.3 Four P’s…………………………………………………………………..39
3.3.1 Product………………………………………………………….....39
3.3.2 Pricing……………………………………………………………..40
3.3.3 Promotion………………………………………………………....41
3.3.4 Place………………………………………………………………41
4. INTERNATIONAL FINANCE…………………………………………….42
4.1 Ghana……………………………………………………………………42
4.1.1 Foreign Exchange Status……………………………………….42
4.1.2 Investment Decisions…………………………………………...42
4.1.3 Future……………………………………………………………42
4.1.4 Break-even………………………………………………………42
4.2 South Africa…………………………………………………………….43
4.2.1 Foreign Exchange Status……………………………………….43
4.2.2 Investment Decisions……………………………………………43
4.2.3 Break-even………………………………………………………43
4.3 Egypt……………………………………………………………………44
4.3.1 Foreign Exchange Status………………………………………44
4.3.2 Investment Decisions…………………………………………..44
4.3.3 Break-even……………………………………………………..44
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5 INTERNATIONAL HUMAN RESOURCE………………………..45
5.1 Recruitment…………………………………………………………45
5.2 Type Of Assignment………………………………………………………45
5.3 Selection Criteria………………………………………………………….45
5.4 Training & Development…………………………………………………46
5.5 Compensation……………………………………………………………..47
5.5.1 Approaches To Compensation……………………………………………48
5.6 Taxation…………………………………………………………………….49
5.7 Repatriation………………………………………………………………...49
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1. Introduction
1.1 Telecom Industry In India
The Indian telecom history begins in 1851 when the British India capital Calcutta
(now Kolkata) witnessed its first operational landlines.
However the telephone services came thirty years later in 1881. In the modern
telecom scenario, the major change was the advent of private telecom business
companies.
In 1997, the formulation of the Telecom Regulatory Authority of India (TRAI) to
facilitate the Indian telecom business plan expansion led to increased share of private
telecom companies in the telecom market size of India. In 1999, the new national
telecom policy came with cellular telecom services.
The smooth functioning of Indian telecom market is supervised by a government
telecom regulatory body called the Telecom Regulatory Authority of India (TRAI).
The telecom regulatory authority of India is a subordinate of the ministry of
telecommunications India.
The telecommunication service in India include telephone services, national and
international dialing services, pay phone service, telex and telegraph (both manual &
automatic), remote area business message network based on satellite transmission,
email and voice mail facility, cellular mobile phone, video conferencing, VSAT,
internet, and intelligent network services among the major telecom services and
solutions.
Indian Telegraph Act 1885: This act empowered the government of India to take
control of the existing telegraph lines and lay down the necessary infrastructure for
further expansion of telecommunications in India.
Indian Telegraph (amendment) Rules 2004: This act set the guidelines for the set
up and development of public telecom services in India.
Indian Wireless Act 1993: According to this act wireless telecom services could be
set up only after due licensing from the telegraphy authority of India.
Information Technology Act 2000: The act defines the information technology
based communications in India. Telecom Industry of India was shown e-commerce
way through this act in a legal manner.
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Communication Convergence Bill 2001: This bill declared the establishment of
Communications Commission of India to regulate the transfer of all form of
communication including broadcasting, telecommunications and multimedia.
Telecom Regulatory Authority of India (TRAI) Act 1997: The act established
TRAI for the regulation of telecom business in India. Further amendments were
made in the act as per the needs of the Indian telecom market that surfaced in the
telecom market analysis and research conducted.
The telecom network services in India are being expanded in order to meet the in-
house demands and also set new world standards. The internatinational telecom
services and products by India's overseas telecom service provider Videsh Sanchar
Nigam Limited (VSNL) include:
Long Distance Transmission Network: It is based on terrestrial microwave radio
relay and co-axial cables along with optical fibre cables.
International Subscriber Dialing Network: It is a fully automated system with
services available for all countries.
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1.5 Current Situation In The Indian Telecom Market
A well built telecom infrastructure in India has brought Indian telecom industry in
an enviable position, as it is second amongst the emerging nations of Asia. Indian
telecom sector ranks as the fifth largest world over.
Moreover, with a rapid increase in the telecom and IT industry in India, the major
cities in india including New Delhi, Mumbai, Kolkata, Chennai, Ahmedabad,
Bangalore, Hyderabad, Pune, Gurgaon, Noida have registered new records in the
sale of various telecom products and solutions. The telecom directory of India is
increasing in size day by day. The leading directories include telecom directory of
Bangalore, Karnataka, Kerala and other South India areas as that is the main
telecom business centre of India.
A new industry upcoming in the telecom sector of India is the telecom outsourcing
or business process outsourcing (BPO). The BPO industry in India is based in the
IT hubs mainly Gurgaon, Noida, Bangalore, Hyderabad, Pune, Chennai, New Delhi,
Mumbai and other cities.
The latest telecom update in India is that, India with a mere 2.2 telecom services per
100 persons is a huge market for telecom business solutions. More and more
international telecom companies are diverting their telecom technologies towards
Indian Telecom sector, in order to confirm their telecom market share in India. This
has also created mass telecom jobs in India; the Indian telecommunications industry
provides many job opportunities especially with the BPO sector job openings.
The main advantages of a digital system are a larger user capacity per unit of
spectrum, ease of implementation of sophisticated encryption, authentication, and
other security features, and robustness against radio channel imperfections. A Pan-
European standard further provides economies of scale in mass production of
handheld and car terminals, which would never have been achieved in the
fragmented national markets in Europe. In the early 1980's, these two objectives
were seen as the most critical success factors for achieving a much larger
penetration of mobile telephone services in Europe. A third factor has been the
introduction of competition in the monopolistic European markets - a cultural
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import from the US. In 1992, the new standard for Pan-European digital cellular
telephony, GSM, saw its first operational successes.
The concept of GSM was initiated in 1982, by CEPT (Conf. Europeenne des Postes
et Telecommunications). In 1978, 900 MHz band was reserved for GSM and the
decision to implement GSM was taken in 1986, followed by the opening up of the
first network in 1994 with access being granted to ISDN(Integrated Services Digital
network) related services.
While GSM was originally intended and designed mainly as a vehicular system, it
is now mostly marketed as a system for handheld use.
1993: -Australia becomes the first non-European country to sign the MoU. First
commercial DCS 1800 system was launched in UK.
1994: -The MoU had over 100 signatories covering 60 countries. More GSM
networks were launched.
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1995: -The specification for the Personal Communication Services (PCS) was
developed in the USA.This version of GSM operates at 1900MHz
1996: -The first GSM 1900 systems become available. Those comply with the PCS
1900 standard.
2003: - CDMA operators launch service. Incoming calls made free on mobile.
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2. Country Profile
2.1 Ghana
2.1.1 Economy
The economy of Ghana,( West Africa), has a diverse and rich resource base,
and as such, has one of the highest GDP per capita in Africa.
On the negative side, public sector wage increases and regional peacekeeping
commitments have led to continued inflationary deficit financing, depreciation of
the Cedi, and rising public discontent with Ghana's austerity measures.
Furthermore, according to the World Bank, Ghana's per capita income has barely
doubled over the past 45 years. Even so, Ghana remains one of the more
economically sound countries in all of Africa.
Manufacturing :
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Ghana's industrial base is relatively advanced compared to many other African
countries. Import-substitution industries include textiles; steel (using scrap); tires;
oil refining; flour milling; beverages; tobacco; simple consumer goods; and car,
truck, and bus assembly.
Services:
Tourism has become one of Ghana's largest foreign income earners (ranking third
in 1997), and the Ghanaian Government has placed great emphasis upon further
tourism support and development.
The financial services in Ghana have seen a lot of reforms in the past years.
Barclays Bank (Ghana) limited has become the first Bank in Ghana to be awarded
the General Banking license in the Country. It has therefore become possible for
non-resident individuals and foreign companies to open offshore Bank Accounts
in Ghana.
Economic history:
At independence, Ghana had a substantial physical and social infrastructure and
$481 million in foreign reserves. The Nkrumah government further developed the
infrastructure and made important public investments in the industrial sector.
Two U.S. companies built Valco, Africa's largest aluminium smelter, to use
power generated at the dam. Aluminium exports from Valco were a major source
of foreign exchange for Ghana.
IMF support:
Since an initial August 1983 IMF standby agreement, the economic recovery
program has been supported by three IMF standbys and two other credits totaling
$611 million, $1.1 billion from the World Bank, and hundreds of millions of
dollars more from other donors. In November 1987, the IMF approved a $318-
million, 3-year extended fund facility. The second phase (1987-90) of the
recovery program concentrated on economic restructuring and revitalizing social
services.
Ghana intends to achieve its goals of accelerated economic growth, improved
quality of life for all, and reduced poverty through macroeconomic stability,
higher private investment, broad-based social and rural development, as well as
direct poverty-alleviation efforts. Other reforms adopted under the government's
structural adjustment program include the elimination of exchange rate controls
and the lifting of virtually all restrictions on imports. The establishment of an
interbank foreign exchange market has greatly expanded access to foreign
exchange.
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2.1.3 Key Statistics
Ghana’s Economy In 2009
Particulars Figures
GDP 4.7%
capital Accra
Currency Cedi (now Ghana Cedi) (GHC)
Exchange Rate Cedis (GHC) per USD 1.4
Exports $5.73 Bn (USD)
Imports $9.81 Bn (USD)
Inflation 19.6%
Budget (revenues) $4.55 Bn (USD)
Budget (expenditures) $6.124 Bn (USD)
Labour Force 10.33 Mn
Unemployment Rate 11%
Population 23.108 Mn
2.1.4 Geography
Ghana is a country in West Africa, along the Gulf of Guinea, just a few degrees
north of the equator.
Ghana, which lies in the center of the West African coast, shares 2,093 km of land
borders with the three French-speaking nations of Burkina Faso (548 km) to the
north, Côte d'Ivoire (668 km) to the west, and Togo (877 km) to the east. To the
south are the Gulf of Guinea and the Atlantic Ocean.
The total area available to Ghana is 2,38,540 km, of which 3.5% is occupied by
water. The largest inland body of water is lake Volta, with climate being
primarily tropical.
With a total area of 238,540 square kilometers, Ghana is about the size of the
United Kingdom. Its southernmost coast at Cape Three Points is 4° 30' north of
the equator. From here, the country extends inland for some 670 kilometers to
about 11° north. The distance across the widest part, between longitude 1° 12' east
and longitude 3° 15' west, measures about 560 kilometers. The Greenwich
Meridian, which passes through London, also traverses the eastern part of Ghana.
The natural resources available in Ghana include gold, timber, industrial
diamonds, bauxite, manganese, fish, rubber, hydropower.
The key environmental issues in Ghana are drought, deforestation, overgrazing,
soil erosion, poaching, habitat destruction, water pollution, drinking water.
2.1.5 Politics In Ghana
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Politics of Ghana takes place in a framework of a presidential representative
democratic republic, whereby the President of Ghana is both head of state and
head of government, and of a multi-party system. The seat of government is at
Golden Jubilee House.
Executive power is exercised by the government. Legislative power is vested in
both the government and Parliament. The Judiciary is independent of the
executive and the legislature.
The Constitution that established the Fourth Republic provided a basic charter
for republican democratic government. It declares Ghana to be a unitary republic
with sovereignty residing in the Ghanaian people.
Intended to prevent future coups, dictatorial government, and one-party states, it
is designed to establish the concept of power sharing. The document reflects
lessons learned from the abrogated constitutions of 1957, 1960, 1969, and 1979,
and incorporates provisions and institutions drawn from British and American
constitutional models.
One controversial provision of the Constitution indemnifies members
and appointees of the Provisional National Defence Council (PNDC) from
liability for any official act or omission during the years of PNDC rule. The
Constitution calls for a system of checks and balances, with power shared
between a president, a unicameral parliament, a council of state, and an
independent judiciary.
Administrative Divisions
Ghana is divided in 10 regions: Ashanti, Brong-Ahafo, Central, Eastern, Greater
Accra, Northern, Upper East, Upper West, Volta, Western.
Judicial Branch
The structure and the power of the judiciary are independent of the two other
branches of government. The Supreme Court has broad powers of judicial review.
It is authorized by the Constitution to rule on the constitutionality of any
legislation or executive action at the request of any aggrieved citizen. The
hierarchy of courts derives largely from British juridical forms. The hierarchy,
called the Superior Court of Judicature, is composed of the Supreme Court of
Ghana, the Court of Appeal, the High Court of Justice, regional tribunals, and
such lower courts or tribunals as Parliament may establish. The courts have
jurisdiction over all civil and criminal matters. The country appointed its first
chief justice of the judicial service in the person of her ladyship Georgina Wood
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Ghana is a country of 22 million people comprising over 60 ethnic groups. Fifty
two major languages and hundreds of dialects are spoken in Ghana, and English,
the official language of Ghana, is spoken by many. Like most other African
nations Ghana has rich traditional cultures that differ from one ethnic group to the
other.
People:
On the basis of language and culture, historical geographers and cultural
anthropologists classify the indigenous people of Ghana into five major groups.
These are the Akan, the Ewe, MoleDagbane, the Guan, and the Ga-Adangbe.
Festivals:
The celebration of festivals in Ghana is an essential part of Ghanaian culture.
Several rites and rituals are performed throughout the year in various parts of the
country, including child-birth, rights of passage, puberty, marriage and death.
Most of the celebrations are attended by entire villages and are strictly observed
by the traditional elders of the respective ethic groups.
Over the past few years there have been attempts by governments past and present
to improve Ghana’s information highways because of the realization of the use of
ICT as a tool for sustainable development, which is indeed significant. This has
led to some improvements in ICT infrastructure though there is still room for
further improvement.
The private sector has also been very instrumental in developments in this sector,
building some form of infrastructure on their own with great success. This has
improved the telecommunications landscape a lot in Ghana.
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(ATM) transport technology, which is fast and reliable. Ghana Telecom also uses
microwave, intercity fibre and fibre operated by Volta Communications (Voltacom)
owned by the Volta River Authority (VRA) which stretches from Kumasi, Nkawkaw,
Accra, Winneba, and Cape Coast and to Obuasi.
This network covers about 15 major cities and towns in the southern part of Ghana.
These networks are accessed through the copper cables, HDSL, the wireless CDMA and
the FCT. The Voltacom fibre optic will be linked further up north of the country and then
connected to the SAT-3 network in Accra to form a national backbone infrastructure
company which would be a separate entity from Ghana Telecom and VRA.
Ghana connects to the global highways using the SAT3 cable and satellite. This SAT3
submarine cable is owned by a consortium of 36 telecommunication companies.
Ghana Telecom is one of the owners of the undersea SAT-3 cable and operates this cable
in Ghana. Non-owners can therefore get on the SAT-3 in one of the following ways:
Buy capacity from Ghana Telecom
Buy directly from cable’s network administrator, Telkom SA, through an
Indefeasible Right of Use (IRU), and therefore bypass Ghana Telecom. However
the national carrier has the first right of refusal.
The availability of this SAT-3 Submarine Optical Fibre Cable linking West/South Africa
and Europe to USA and Asia provides quality phone and high-speed Internet service.
Ghana Telecom also has a satellite Earth Station at Nkuntunse. The SAT-3 Submarine
Cable and satellite systems are used to provide International Private Leased Circuit
(IPLC) with speeds ranging from 64Kbps to 155Mbps. Since the SAT-3 cable is the only
undersea cable system that Ghana has access to, it raises concern on the lack of
redundancy; particularly with respect to international cable connectivity. Most ISPs
receive data on average at a speed of 2Mbps and run it to subscribers at an average speed
of 1Kbps. Subscribers face more serious problems since there is inadequate support for
them by some ISPs.
Telecom redundancy in respect of the SAT-3 link is also a challenge though we have
been informed that Ghana Telecom is taking steps to rectify this
situation.
Internet Service Providers currently in Ghana operate using Ghana Telecom SAT3 fibre
and or their own satellites for International connectivity and for terrestrial connectivity
they use leased lines from Ghana Telecom, wireless technologies such as Kasapa CDMA
technology, license and license free frequency spectrums.
15
Most ISPs use Ghana Telecoms SAT3 for connectivity to the global Internet. The
National Communications Authority (NCA) has granted licenses to many ISPs to operate
their own international satellite gateways as well. A few of the Internet service providers
use a combination of SAT3 fiber and satellite connectivity whiles others use the satellite
for redundancy.
On the SAT3, 2Mbps connections are available to the ISPs from Accra to Portugal at
twelve thousand dollars ($12,000) but members of the Ghana Internet Service Providers
Association (GISPA) negotiated that to five thousand dollars ($5000). The ISPs build
their own networks within Ghana by providing access in some of the other regional
capitals using a combination of VSAT, microwave and fibre optic connections for their
backbone connectivity.
Although the fibre optic ring that links the regional capitals in the southern part of Ghana
was intended to help manage the electrical grid, the plan was also to use it as a high speed
data backbone for the country. Only a few ISPs like ThirdRail (now DiscoveryTel) and
Internet Ghana use Voltacom’s backbone capacity.
This fibre uses Synchronous Digital Hierarchy (SDH) at 150Mbps. From the research, it
was found that the dial-up services offered by some of the ISPs via the old copper cables
of Ghana Telecom gave subscribers major problems.
About a third to a half of all calls do not complete because of network congestion and
poor maintenance. The poor state of the telecoms infrastructure and the drop in
international call rates has encouraged a rapid growth in grey market Internet
telephony.
Ghana Telecom has estimated that this is costing by their own estimates
USD15-20 million a year in revenues.
All mobile telephony operators have built their own networks and roll out services to
their subscribers using different kinds of technologies. These operators are at various
stages of their development rollout, and employ different technologies and equipment to
achieve, the same thing, that is, communication.
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This is essentially a third generation mobile technology and is backward-compatible with
earlier versions. They deliver increased network capacity to meet the growing demand for
wireless services and high-speed data services.
There are three GSM operational companies – MTN, TiGO and GT Onetouch. Westel
Telecommunications are getting ready to roll out their services after being granted a
license to operate GSM in 2006.
General Packet Radio Service (GPRS) is the next generation data technology for GSM.
GPRS can send data at speeds ranging from 9.6 to 57.6 kbps by combining three to six
voice channels in the TDMA system. It is widely deployed in Europe.
EDGE (Enhanced Data rate for GSM Evolution) is an evolutionary 3G technology based
on existing GSM and EDGE will allow more data (up to 384 kbps) to be transmitted over
the TDMA radio frequency once quality improves. GPRS and EDGE technologies are
available to all GSM subscribers in Ghana.
From the year 2000, telephone density per 100 has risen from as low as 1.01 to 27.2 at
the end 2006. There has been a commensurate increase in the number of companies as
well. There are currently five licensed mobile operators, four of which are operational.
There are two national telecom operators, Ghana Telecom and Westel both of which
contribute about 360,000 fixed lines. There is a lot of work to be done by these operators
in terms of increasing subscribers.
Moving forward, it is important for the nation as a whole to look at expanding ICT
infrastructure considering the impact telecommunications has had on the fortunes of this
economy.
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2.1.8 Reforms In The Telecom Sector In Ghana
In 1996 Ghana privatized its incumbent telecommunications firm by selling 30
percent of Ghana Telecom to Telekom Malaysia, licensing a second network
operator, and allowing multiple mobile firms to enter the market. The reforms
yielded mixed results. Landline telephone penetration increased dramatically
while the number of mobile subscribers surpassed even this higher level of fixed
line subscribers. On the other hand, the network did not reach the levels the
government hoped, the second network operator never really got off the ground,
and the regulator remained weak and relatively ineffective. The sustainability of
competition is unclear. The government ended Telekom Malaysia's management
of Ghana Telecom and has invited Norway's Telenor as a strategic partner. What
this means in practice remains unclear, and the process for selecting Telenor
lacked any transparency. Meanwhile, some of the mobile firms are in precarious
financial positions. Competition is still relatively strong, but its sustainability will
depend on the government's future commitment to ensuring it.
There are currently four mobile network operators in Ghana. Tigo (owned by
Millicom Ghana), One Touch (owned by Ghana Telecom which is now majority
owned by Vodafone) and Scancom (owned by MTN) all operate GSM 2G and 3G
networks, while Kasapa (currently owned by Hutchison Telecommunications
International) operates the country’s only CDMA network. There are two other
GSM licensees in Ghana, Zain-owned Western TeleSystems (2G) and Nigeria’s
Glo Mobile (2G and 3G). While neither operates at the moment, both have
networks planned according to Informa Telecoms & Media’s World Cellular
Information Service. The Ghanaian regulator- the National Communications
Authority (NCA)-has also granted one WiMAX licence to the ISP Internet
Ghana-this too has yet to go live.
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The current licence framework only became effective in 2004 when mobile
operators were, for the first time, issued long-term licences. Before that date,
operators were granted yearly authorisations to use a specific spectrum.
Ghana is Africa’s ninth largest mobile market and West Africa’s second largest
by subscription count after Nigeria. Informa Telecoms & Media forecasts that the
10 million subscriptions mark will be passed before the year is out. The country
will by then have six mobile networks as both Glo Mobile and Zain are expected
to launch during Q408. Tigo recorded the highest year-on-year growth, 84 per
cent, in Q108, taking market share from Scancom, which had 52 per cent of the
country’s subscriptions in Q108. Though Scancom had the highest ARPU, $14 in
Q208, with 97 per cent of spending on voice services. Vodafone’s One Touch had
an ARPU of $9 for the same period which compares favourably with Kasapa’s $8
and Tigo’s $7.5.
Glo Mobile entered the Ghanaian market after a so-called express bid for a sixth
mobile licence was launched on 6th March 2008. The authorities shortlisted 11
unsolicited applications from companies including Globacom Nigeria, Teylium
Group and Warid Telecom. On 20th June 2008 the NCA announced that Glo
Mobile-one of Nigeria’s biggest three mobile operators-had been awarded the
licence for a consideration of $50.1m. The new operation in Ghana was allocated
spectrum in the 900/1800MHz and the 2.1GHz bands, as well as an international
gateway licence.
However, Vodafone was not among the initial bidders mentioned. France
Telecom was even reported to be the winner in November 2006, mainly in the
19
local Ghanaian press. But in February 2008, it was reported that the government
had suspended the sale of shares in Ghana Telecom. France Telecom’s $520m
offer had been rejected because the government put a higher price on the
company’s assets. Vodafone was announced as the winner on 3rd July 2008. The
UK group closed the deal in August acquiring a 70 per cent stake from the
Ghanaian government for $900m. The deal was struck on a debt-free, cash-free
basis, implying a total enterprise value for Ghana Telecom of about $1.3bn. The
government will retain 30 per cent of the company.
Vodafone’s entry into Ghana fits into its strategy of expanding aggressively into
emerging markets to offset slowing growth in mature markets. It gives the UK
firm access to one of the remaining attractive markets in the region. The
challenges will mainly lie in Ghana Telecom’s fixed-line assets and Vodafone
will have to deal with heavy debts and reducing the number of staff. The move
was a final feather in the cap for former Vodafone chief executive officer Arun
Sarin who stepped down at the end of July. “Ghana is one of the most attractive
markets in Africa with mobile subscribers growing at more than 55 per cent per
annum. Our extensive operating experience together with our portfolio of
products and services position us well to deliver a superior mobile experience to
Ghanaian customers and significantly improve financial performance,” he said.
Vodafone is aiming for Ghana Telecom to ultimately raise its mobile market share
to about 25 per cent, reversing recent underperformance. Sarin said that over the
next five years Ghana Telecom is to invest over $500m in its operations and
network, restoring and expanding network coverage and completing and
integrating the fibre backbone, as well as introducing initiatives such as M-PESA
and ultra-low cost handsets.
It all started with the entry of Zain in the 4th quarter of 2008. Zain had already
done their homework very well and launched a very sophisticated network. They
have the financial muscle to announce their new brand loudly and they did that
with maximum effect. Before then, no operator had given MTN Ghana (the
present market-leader) serious competition like Zain has.
Zain launched the first 3.5G network (supports very fast Internet connectivity,
video calling etc) in Ghana and MTN was scrambling to catch-up. Though Zain’s
3.5G network is presently limited to Accra, Tema and Kumasi, EDGE (faster than
GPRS) is available where their 3.5G doesn’t cover. Perhaps it is an endorsement
of the quality offered by Zain that makes it the fastest growing network in Ghana
today. Zain presently has in excess of 1 million subscribers as per media reports.
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Vodafone is widely known to be a world-class telecommunications company.
One can only expect the very best from them, following their take-over of Ghana
Telecom and its Onetouch subsidiary. Vodafone also made a lot of noise with its
launch into Ghana earlier this year. They announced having made improvements
to the cellular and fixed line networks before launch.
Market Statistics
Current Operators
Internet
21
Wireless Operators
Government
Legal/Regulatory Framework:
All the above statistics taken together makes it conducive for telecom operators to
enter the Ghana Telecom Market. Given the connectivity, as also the available
telecom infrastructure has affected our choice of Ghana for international business.
As far as competition goes, only 6 GSM operators does not account for much
competition but these are strong players which have a greater percentage of the
Ghanian Telecom market, which requires a well planned entry strategy.
22
Over all Country Attractiveness:
Costs
Benefits
Licence costs
Exposure to the untapped market
Distribution costs
of Ghana.
significant additional growth
prospects from recent oil field
discoveries
low mobile penetration at around 35%
Over all Country
Attractiveness
Risks
Strong Competition
Telecom market nearing saturation
Currently, Ghana has six GSM Mobile Operators and the implementation of MNP
would give customers/subscribers the choice and flexibility to be on any network
they want.
Four out of the six GSM Operators in the country namely [Zain, Kasapa Telecom,
Glo Mobile and Vodafone-Ghana] have openly declared their support for its
23
implementation but only MTN is very mute on this subject and rather asking the
National Communication Authority for comments on the implementation of
MNP.
With as many as six GSM Operators and a penetration level of more than 55% of
its population, implementation of MNP in Ghana earmarks the future of telecom
sector in Ghana.
Demand
Factor Conditions
Endowments
( large potential &
(availability of greater demand
required skilled from the service as
labour as also the also increasing
basic telecom demand from the
infrastructure) agricultural sector)
Presence of Vodafone
and other
internationally
competitive players
24
2.2 South Africa
2.2.1 Economy
The economy of South Africa has a two tiered economy; one rivaling other
developed countries and the other with only the most basic infrastructure. It is
therefore a productive and industrialised economy that exhibits many
characteristics associated with developing countries, including a division of
labour between formal and informal sectors and an uneven distribution of wealth
and income. The primary sector, based on manufacturing, services, mining, and
agriculture, is well developed.
South Africa's transportation infrastructure is among the best in Africa, supporting
both domestic and regional needs.
The formal economy of South Africa has its beginnings in the arrival of Dutch
settlers in 1652, originally sent by the Dutch East India Company to establish a
provisioning station for passing ships. As the colony increased in size, with the
arrival of French Huguenots and German citizens, some of the colonists were set
free to pursue commercial farming, leading to the dominance of agriculture in the
economy.
25
Telecommunications:
The domestic telecommunications infrastructure provides modern and efficient
service to urban areas, including cellular and internet services.
In 1997, Telkom, the South African telecommunications parastatal, was partly
privatised and entered into a strategic equity partnership with a consortium of two
companies, including SBC, a U.S. telecommunications company.
In exchange for exclusivity (a monopoly) to provide certain services for 5 years,
Telkom assumed an obligation to facilitate network modernisation and expansion
into unserved areas.
A Second Network Operator was to be licensed to compete with Telkom across
its spectrum of services in 2002, although this license was only officially handed
over in late 2005 and has recently begun operating under the name, Neotel. Four
cellular companies provide service to over 20 million subscribers, with South
Africa considered to have the 4th most advanced mobile telecommunications
network worldwide. The four cellular providers are Vodacom, MTN, Cell C and
Virgin Mobile.
Particulars Figures
GDP - 1.9%
Capital Capetown
Currency Rand
Exchange Rate Rand Per USD 8.54
Exports $67.93 Bn USD
Imports $70.24 Bn USD
Inflation 7.2%
Budget (revenues) $74.92 Bn USD
Budget (expenditures) $86.26 Bn USD
Labour Force 17.32 Mn
Unemployment Rate 24%
Population 49,052,489
2.2.4 Geography
South Africa occupies the southern tip of Africa, its long coastline stretching
more than 2,500 km (1,553 mi) from the desert border with Namibia on the
Atlantic coast southwards around the tip of Africa and then north to the border
with subtropical Mozambique on the Indian OceanIn some places, Although the
26
country is classified as semi-arid, it has considerable variation in climate as
well as topography.
Area
total: 1,219,912 square kilometres (471,011 sq mi)
land: 1,219,912 square kilometres (471,011 sq mi)
water: 0 square kilometres (0 sq mi)
Natural resources :
South Africa has a rich resource base of gold, chromium, antimony, coal, iron ore,
manganese, nickel, phosphates, tin, uranium, gem diamonds, platinum, copper,
vanadium, salt, natural gas.
27
three-tiered, with representatives being elected at the national, provincial and
local levels.
2.2.6 Culture in South Africa
The main religions followed by the south African people include, Zion Christian
(11.1%), Pentecostal/Charismatic (8.2%), Catholic (7.1%), Methodist (6.8%),
Dutch Reformed (6.7%), Anglican (3.8%), Muslim (1.5%), other Christian (36%),
other (2.3%), unspecified (1.4%), none (15.1%.)
28
However, the infrastructure in the areas occupied by the black majority is
generally undeveloped or badly maintained.
South Africa's modern and extensive transport system plays a very important
role in the national economies of several other African states. A number of
countries in Southern Africa use the South African transport infrastructure to
trade.
SPOORNET, the largest railroad operator in Southern Africa, has 3,500
locomotives and 124,000 wagons. There are 30 international airports, where the
necessary facilities and services exist to accommodate international flights.
South Africa has approximately 5.3 million installed telephones and 4.3 million
installed exchange lines. This figure represents 39 percent of the total lines
installed in Africa. By November 1998, more than 1.5 million South Africans
were using the Internet with service providers increasing their customer base by
10 percent a month.
The cellular market in South Africa is one of the fastest developing in the world.
It started in mid-1994 and in four years has grown to over 2 million subscribers.
The introduction of the pre-paid option for air-time boosted the market during
1997. Uptake of the prepaid option has been rapid.
There are approximately 4.6 million fixed line phones and approximately 2
million cellular phones in South Africa. It is estimated that every third call made
in SA is from a cellular phone.
With subscriber numbers still showing growth potential, revenue per subscriber is
decreasing. MTN and Vodacom are therefore exploring new opportunities. These
include:
29
Expansion into neighbouring countries. Vodacom already has shares in a GSM
network in Lesotho and MTN has shares in Uganda and Rwanda GSM networks.
Both MTN and Vodacom bids were unsuccessful for the Botswana cellular
licence.
Data transfer. As next generation cellular technologies capable of high speed data
transfer come of age, data is expected to form an increasing component of total
wireless traffic.
Expansion into other communications sectors. Vodacom has indicated its
intention to become a broad-based communications company, and has begun
offering Internet access services through its “Yebo” connection.
Demand
Factor Conditions
Endowments
( large potential &
(availability of greater demand
required skilled from the service as
labour as also the also increasing
basic telecom demand from the
infrastructure) young generation.)
Presence of Vodafone
and other
internationally
competitive players
30
2.3 Egypt
2.3.1 Economy
Occupying the northeast corner of the African continent, Egypt is bisected by the
highly fertile Nile valley, where most economic activity takes place. In the last 30
years, the government has reformed the highly centralized economy it inherited
from President Gamel Abdel Nasser.
Natural Resources:
Warm weather and plentiful water permit several crops a year. Land is worked
intensively and yields are high. Cotton, rice, wheat, corn, sugarcane, sugar beets,
onions, and beans are the principal crops. Increasingly, a few modern techniques
are applied to producing fruits, vegetables and flowers, in addition to cotton, for
export. Further improvement is possible. The most common traditional farms
occupy one acre (4,000 m²) each, typically in a canal-irrigated area along the
banks of the Nile. Many small farmers also own cows, water buffalos, and
chickens.
31
2.3.2 Key Statistics
Particulars Figures
GDP 4.5%
Capital Cairo
Currency Egyptian Pounds (EGP)
Exchange Rate EGP per USD 5.6
Exports $43.98 Bn USD
Imports $22.91 Bn USD
Inflation 10.1%
Budget (revenues) $48.86 Bn USD
Budget (expenditures) $61.61 Bn USD
Labour Force 25.8 Mn
Unemployment Rate 9.7%
Population 83,082,869
2.3.3 Geography
The Geography of Egypt can be split into two sections. Southwest Asia and
North Africa
Egypt has shorelines on the Mediterranean Sea and the Red Sea. It borders Libya
to the west, Sudan to the south, and the Gaza Strip and Israel to the east. Egypt,
covering 1,001,449 square kilometers of land, is about the same size as Texas and
New Mexico combined, four times the size of the UK and double that of France.
Its longest distance from north to south is 1,024 kilometers, and from east to west
is 1,240 kilometers. Egypt's natural boundaries consist of more than 2,900
kilometers of coastline along the Mediterranean Sea, the Gulf of Suez, the Gulf of
Aqaba and the Red Sea.
2.3.4 Politics
32
2.3.5 Infrastructure and Technology
Egypt has a total of 90 airports. Egypt Air, the country's official airline, carries
some 4.6 million passengers, roughly 25 percent of international air traffic, and an
estimated total of 87,240 metric tons of freight annually, but has a poor service
record and is generally unreliable. Egypt has 3 major ports, at Alexandria, Port
Said, and Suez, and 3,500 kilometers (2,175 miles) of waterways, divided
between the Nile and the canals.
33
2.3.6 Competition in Egypt
The existing operators in the Egyptian telecom market include the following:
Fixed Line Operators: Telecom Egypt
Mobile operators: Vodafone Egypt ( Joint Venture Between Vodafone and
telecom Egypt),Mobinil (France Telecom and Orascom Telecom) and Etisalat
Egypt.
The market already had two strong networks: Vodafone Egypt and MobiNil,
representing Vodafone International and Orange, the number one and two mobile
operators worldwide. Telecom Egypt (TE), the state-run fixed-line monopoly that
falls under MCIT, entered the picture with promises to launch Wataniya, the
nation’s third operator in an industry then barely five years old. At least 6.84
million subscribers are shared between two GSM operators, MobiNil (3.64
million) and Vodafone (3.19 million).
Regulatory authorities will have to consider three factors when assessing the
effect a third mobile operator will have on the sector: acquisition, retention and
impact on Average Revenue per User (ARPU), a key industry metric.
Acquisition refers to the ability of a mobile operator to acquire new users;
retention measures an operator’s ability to hold on to existing users; while ARPU
refers to the revenue generated by each user.
Though the number of players in the Egyptian telecom market are limited, but
they hold a greater percentage of the telecom market share and offer a greater
competition to the new entrants.
34
2.3.7 Porter’s Diamond Applied to Egypt Telecom Industry
Demand
Factor Conditions
Endowments
( large potential &
(availability of greater demand
required skilled from the service
labour as also the sector and also the
basic telecom young generation.)
infrastructure)
Presence of Vodafone
and other
internationally
competitive players
CHAPTER 3
35
3. International Marketing
3.1 Segmentation and Targeting
The countries so chosen can be segmented on the basis of the following:
Income/ Occupation
Education
Lifestyle
Age group
At the initial stages the following cities in Ghana namely Accra,Kumasi and
Tamale, will be targeted as these account for the majority of the population
of Ghana.
The target age group will be 15-64 years (59% of the population),with
growing emphasis on the lower age group of below 14 years of age,
acoounting for 37% of the entire population.
36
The literate population comprises only of 57% of the population, and thereby
an equal emphasis on the illiterate population becomes a must.
3.1.3 Segmentation of the South African market
All the three capital cities of South Africa will be entered into at the
initial stage, which includes: Cape Town, the largest of the three, is the
legislative capital; Pretoria is the administrative capital; and
Bloemfontein is the judicial capital.
The target age group will be 15-64 years, which comprises of 65.8% of
the entire population.
The target occupation will be services employing 65% of the labour
force.
The literate population accounts for as high as 86% of the population,
thereby the focus will be on the literate population of South Africa.
37
3.1.5 Segmentation of the Eyptian market
Based On Literacy:
definition: age 15 and over can read and write
total population: 71.4%
male: 83%
female: 59.4% (2005 est.)
Based On Occupation:
agriculture: 32%
industry: 17%
services: 51%
Our services as a GSM service provider will begin in the capital of Egypt that
is Cairo, to start with.
The population in the category of the age group 15-64 yrs, which comprises
a major percentage(63.8%) of the Egyptian population, will be our target
market in Cairo.
The services sector will be our target market, considering the fact that 51%
of the labour force is employed in the services sector.
Since, the use of GSM services requires minimum of reading abilities, the
main focus will be on the literate population to start with, which comprises of
as much as 71% of the entire population.
38
b) For the common masses who want greater connectivity
c) Introducing Per second call rates for the first time in the African markets.
d) Greater talktime at lower call rates
3.3 4 Ps
3.3.1 Product
Our Service includes GSM services which will comprise of the following :
International roaming
Open architecture
High degree of flexibility
Easy installation
Interoperation with ISDN (Integrated Services Digital Networks), CSPDN
(Circuit-Switched Public Data Network), PSPDN (Packed- Switched
Public Data Network), and PSTN (Public-Switched Telephone Network)
High-quality signal and link integrity
High spectral efficiency
Low-cost infrastructure
Low-cost, small terminals
Security features
These objectives have been gradually achieved and a broad collection of services
are provided. The GSM services are grouped into three categories:
1. Teleservices (TS)
2. Bearer services (BS)
3. Supplementary services (SS) TS cover, in essence, telephony, BS encompass
basically data transmission, and SS are the value-added features.
Teleservices: (TS)
Regular telephony, emergency calls, and voice messaging are within TS.
Telephony, the old bidirectional speech calls, is certainly the most popular
of all services. An emergency call is a feature that allows the mobile
subscriber to contact a nearby emergency service, such as police, by
dialing a unique number. Voice messaging permits a message to be stored
within the voice mailbox of the called party either because the called party
is not reachable or because the calling party chooses to do so.
39
Bearer Services : (BS)
Data services, short message service (SMS), cell broadcast, and local features are
within BS. Rates up to 9.6 kbit/s are supported. With a suitable data terminal or
computer connected directly to the mobile apparatus, data may be sent through
circuit-switched or packet-switched networks. The broadcast mode (to all
subscribers) in a given geographic area may also be used for short messages of up
to 93 alphanumeric characters. Some local features of the mobile terminal may be
used. These may include, for example, abbreviated dialing, edition of short
messages, repetition of failed calls, and others.
Advice of charge.
Barring of all outgoing calls
Barring of international callsBarring of roaming calls
Call forwarding.
Call hold
Call waiting
Call transfer etc
3.3.2 Pricing
Use of Predatory pricing methods is going to be adopted in the chosen countries, as
all the three countries have a few but frimly established telecom operators who are
resorting to price reduction as one of the strategies to gain more market share.
Ghana
Charges would be 14 ghana pesewas/ minute
Free night calls from 11pm to 7am within the network.
Egypt
Our SIM cards will be retailed at 20,000 point of sale via ~1000 distributors
the company offers plan, ‘talklonger@ EGP 60/min while other telcos are
bringing down the pricing to 0.75 EGP/sec.
South Africa
40
R 0.70 for the first minute and at R1.55 for every minute thereafter anytime
of the day. SMS messages will be are charged at 75 cents while off-peak
SMSs will be charged at 25 cents per message.
3.3.3 Promotion
Capturing the younger generation who forms a major part of the target
market.
Celebrity endorsements
Special season offers, festival discounts, and innovative advertisement
campaigns will primarily be used by the cellular service providers as
tools to push back the competition and penetrate into the chosen
markets.
41
4. International Finance
4.1 Ghana
4.1.1 Foreign Exchange Status
The Ghanaian Cedi is the currency in Ghana (GH, GHA). The symbol for GHS
can be written ¢. The Ghanaian Cedi is divided into 100 pesewas. The exchange
rate for the Ghanaian Cedi was last updated on February 17, 2010 from
Bloomberg. The GHS conversion factor has 4 significant digits.
1 GHS = 32.1 INR
Kasapa would retain a 30 percent stake in Kasapa Telecom Limited, which has an
enterprise value of around $1.3 billion.The 70% stake would br bought for $900 million
on a debt-free, cash-free basis.
4.1.3 Future
Our short term goal : 1 million customers by May 2012.
Over the next 5 years, we expect Kasapa to invest over US$500 million in its
operations and network, restoring and expanding network coverage and
completing and integrating the fibre backbone
Through these actions, we intends that Kasapa will deliver a superior product and
service offering in the Ghanaian market and thereby raise its mobile market share
over time to around 25%, reversing recent underperformance
42
4.2 EGYPT
The company is targeting an 8 % pan-Egypt market share, and the opening of one million
retail points and breaking even on EBITDA within three years.
4.2.3 Break-Even
43
4.3 SOUTH AFRICA
1 ZAR = 6 INR
44
5. International Human Resource (HR)
5.1 RECRUITMENT
Keeping in mind Egypt’s second most advanced status in Middle East after Israel, we follow
the Polycentric approach of staffing. In this policy, each subsidiary is a distinct national
entity with some decision-making autonomy. HCNs manage subsidiaries who are seldom
promoted to HQ positions in parent country. Moreover, PCNs are rarely transferred to
subsidiary positions.
This approach will also help in eliminating language barriers, avoiding adaptation of PCNs
and reducing the need for cultural awareness training programs. This also allows us to take a
lower profile in sensitive political situations. Moreover, it’s not only less expensive but will
also give continuity to the management of foreign subsidiaries (lower turnover of key
managers).
Similar policy will be used for our South Africa subsidiary as well.
However, for Ghana subsidiary we will follow the Ethnocentric approach because of the
absence of skilled manpower. It will ensure that our subsidiary complies with overall
corporate objectives and policies, has the required level of competence and controls.
Besides this, we will also follow virtual and contractual assignment to maintain a result
oriented and better control.
45
5.4 TRAINING AND DEVELOPMENT
The role of training is in supporting expatriate adjustment and on-assignment
performance.
1- Management Development
A- Individuals gain international experience which assists career progression
B- Multinational gains through having a pool of experienced operators on
which to draw for future international assignments
2- Organizational Development
A- Accumulating a stock of knowledge, skills and abilities
B- Developing a global mindset
C- Expatriates as agents of direct control and socialization in the transfer of
knowledge and competence.
1: Pre-departure training-
A pre-departure training program helps to ensure fewer difficulties when abroad. The
program covers such topics as:
46
A- Cross-cultural communicational aadaptability is a major requirement for successful
communication in our modern world. Body-talk, expressive sounds, facial and other
gestures, posture, bodily movements, and the three ‘distances’ (intimate, personal
and social) which vary in cross culture. In the global workplace we tend to minimize
or even to ignore our cultural differences while mythologizing that they no longer
exist.
C- Interpersonal Skills - People interacting with other people, and how do they do it,
that's what Interpersonal Skill means.
E- Stress Management- Some stress is always good. But to reduce the excessive stress
specialized training is required.
F- Functional Capability- It’s very important to train the person for the job assigned
internationally. Even if person is expert, a fresher course is given.
2: Language Training
3- Practical Assistance
5.5. COMPENSATION
We must manage highly complex and turbulent local details, while concurrently
building and maintaining a unified, strategic pattern of compensation policies,
practices and values.
47
The area of international compensation is complex, primarily because we will have to
cater to three categories of employees: PCNs, TCNs and HCNs
Base salary
Hardship premium
Benefits
Allowances
Cost-of-living allowance
Housing allowance
Relocation allowance
Education allowance
Hardship allowance
48
A- Goods n Services
Home-country outlays for items such as food, personal care, clothing,
household furnishings, recreation, transportation, and medical care.
B- Housing
Major costs associated with housing in the host country.
C- Income Taxes
Parent-country and host-country income taxes
D- Reserve
Contributions to savings, payments for benefits, pension contributions,
investments, education expenses, social security taxes, etc.
Of these, we will be following the Balance Sheet Approach because it not only guarantees
maximum employee satisfaction but also maintain equity among various factors.
5.6 TAXATION
In all the 3 countries, we will be following the Tax Equalization Approach thus we will
withhold an amount equal to the home-country tax obligation of the PCN, and pay all taxes in the
host country.
5.7 REPATRIATION
A proper repatriation is a must to ensure the success of the expatriate and
49