Liberia: Consumers Decry Hike in Lonestar Cell Scratch Cards in Liberia
Subscribers and dealers of LoneStar Cell MTN have complained of the increment in the price of the scratch cards being sold by the GSM service provider on the Liberian market. At first when LoneStar was the lone GSM operator in the country, their scratch card was sold approximately at US$15 while the Sim card was sold at US$65.
Sarah Benson of Duala said it was frustrating that the scratch card price has been increased to LD$100 instead of LD$90 as it should be sold based on the exchange rate between the Liberian and United States dollars which now stands at US$1 to LD$87. "This is so unfair to us and we must tell the Liberian Government or else they will increase it further", she added. Amadou Barry of Carey Street, a money changer said the profit he makes has reduced immensely so he prefers buying more Cellcom cards than LoneStar.
"Look at my box, we used to buy 10 for 48 United States Dollars but now is 49 so we have only 1 dollar profit but we don't expect this unusual increment from LoneStar who had been extorting from us during the days of Taylor, "said Barry. For Benjamin Kallon, a money changer on By-Pass, he wonders if the company informed the Liberia Telecommunication Authority before its increment of the scratch card and requested that the regulatory authority put in measures to control the telecommunication market.
"With the way LoneStar running their phone company, to me it is lawless and the regulatory authority must put in measures to stop them," he added. During the Taylor's Administration, MTN was granted monopoly rights to operate in the country in return for a hefty 40% share to former President Charles Taylor through a shell company operated by Mr. Benoni Urey and Mr. Emmanuel Shaw. MTN enjoyed virtual monopoly in Liberia until new operators were granted licenses after Taylor's departure from the Presidency.
The immediate impact of the new entrants was a huge reduction in the cost of SIM cards from US$70.00 set by MTN to a mere $1. Additionally, recharge vouchers, which were issued in minimum denominations of US$30.00, were reduced to as low as $1 voucher denominations. Network coverage was expanded throughout the country and low cost handsets were introduced leading to an increase in access to Liberians throughout the country.
Despite these developments, MTN maintained its control on the market by frustrating interconnections among service providers by insisting on exorbitant interconnection rates and even refusing at times to interconnect. It was only later when the Liberia Telecommunications Authority was created that MTN was required to reduce interconnection rates and freely allow interconnection with other service providers. Aggressive competition among service providers has eaten into MTN's market share and broken its hold over the Liberian market. According to one MTN insider, "the company revenue and profit margin has dropped so much that the company has lost its long time dominant market position."
It can be recalled LoneStar Cell MTN wrote the Liberia Senate to put a halt to the free call due to what it termed as loss to the country's revenue. The Company approached the national Senate in a bid to prevent its rivals from offering cut-price promotional offers to its subscribers.
Deputy CEO Louis Roberts sent a letter to the Senate on 26 August complaining that its rivals' free calls promotions are 'negatively impacting' on its ability to generate revenue and causing the government to lose 'millions of dollars in revenue', imploring the House: 'In view of the above, we pray your indulgence for consideration in addressing our pleas and concerns.'
In order to reverse its decline in market share and profitability, MTN critics say the company is attempting to manipulate the Senate into believing that "free call" promotions is causing the government to lose revenue, when in fact it is causing MTN to lose money and its competitive edge. One market expert said, "For MTN to even insist that free call promotions will cause a loss of revenue to government is not only disingenuous, but intended to mislead the government. If you are given something for free, that does not mean that you would be willing to pay for that thing if it was not available for free. Free calls only promote higher volume of calls because they are free. But if the free calls were stopped, there is nothing to suggest that consumers would make the same volume of calls."
Some observers say the MTN argument is flawed reasoning. "The fact of the matter is that MTN's strength was in its on-net traffic, but companies such as Cellcom and the emergence of LIBTELCO have succeeded in building their on-net traffic and subscriber base through free call promotions. "The success of such promotions has caused subscribers to switch from MTN, which maintained among the highest on-net call rates in the country. Rather than cry crocodile tears to the government, MTN should review its tariffs and improve its services to its customers, which has significantly slumped over the past few years."
The consumer said that MTN's suggestion that free calls should be discouraged or even stopped is a slap in the face of consumers who have contributed to MTN's success in the past. "Left to MTN, telecommunication services would not be accessible to low income Liberians, but only to the wealthy, like those who purchased their SIM cards for US$70.00 during its past glory days."
Meanwhile it's Press and Public Affairs Zenu Miller responding to the claims said the increment was due to the dealer's commission reduction but added that the reduction was not at the consent of the company. "We reduced the commission for the dealers so because we reduced the commission of the dealers so they increase the price for their satisfaction but it is not directly that the price has been increase by LoneStar," he said.
LoneStar Cell MTN is one of Liberia's leadingis a telecommunications company and it operates one of the largest wirelesstelecommunications network in Liberia, with 48% of the market share in 2011. It was Founded in 2000 by Beirut-based Investcom, the company became a subsidiary of the South African conglomerate MTN Group following MTN's acquisition of Investcom in 2006 and Liberian businessman Benoni Urey is the Chair of LoneStar Communication Corporation and owns a significant portion of the company through his PLC Investments Group.
Source: Front Page Africa 12 November 2015