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Interview with
Mr. Prince Kofi Kludjeson,
Chairman
July 7th 1999
Contact :
Technology Road, Kotobabi, Accra P.O.Box 10208, Accra-North , GHANA
Tel: (233) 28 210035 – 210036
(233) 21 224202
Fax: (233) 28 210103 / (233) 21 224 202
E-mail: celltel@africaonline.com.gh
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Could you begin by giving us a brief historical background to Celltel and tell us about its main activities?
Celltel as a company, was founded six years ago. It was our dream to determine how best to help the country to provide quality and affordable telecommunications services to its people. At that time we were representing AT&T for the sale of its products and services in Ghana. We were also marketing computers. So we conceived the idea to find ways to marry the two technologies together.
We therefore approached AT&T to assist in the development of a solution as they are better equipped to provide such solutions. Several alternative solutions were developed and evaluated leading finally, to the formation of Celltel Limited as a cellular telecommunications services provider.
The business operation started on a small scale. Large American companies like AT&T did not have the African strategy at the time for technological transfer. After two years of extensive discussions, we finally got AT&T executives interested in our proposals and business ideas. What made it interesting to them was the fact that we were very interested in doing something for our country besides just providing telephones.
The telecommunications industry is very capital intensive. We did not have the kind of money that was been talked about to successfully enter the business. Again, we engaged in several lengthy discussions and negotiations with AT&T executives before they finally decided to support us financially with this project.
A final problem that had to be resolved was the fact that AT&T executives had very little knowledge of Africa at the time. Consequently, they did not have an African strategy.
We therefore had to commit to absolve AT&T of all local issues and we had to give our commitment to handle all local issues. In the event the project did not prove viable, AT&T would tale equity in the company and its management. We accepted this challenge and initiated action to get the company off the ground.
After receiving our commitment, the board of AT&T finally approved the project for Celltel and asked it to be scoped to any level that we deemed necessary for it to succeed. Several AT&T engineers were dispatched to Ghana to assist us develop the project scope. Initially, it was our objective to limit the scope of the project to Ghana. AT&T engineers were however, not convinced that Ghana by itself would be able to provide the market size to make the project viable. It was finally decided that we would design the project for Ghana with the future growth capabilities to serve the West African Region.
This was in about 1996?
Yes. The telecommunications market in Ghana was very small. However, we insisted that the system be designed for extension to Tamale, to the rural areas and the rest of the country because Accra alone would not provide the market size. It is an established fact that most Ghanaians living in Accra hail from the rural areas outside of the city.
This is a situation foreign investors do not understand. They would send consultants to assess the level of business opportunity in the country. These consultants in most cases come and stay one week in Accra and they will return home to submit reports that there is no market in Ghana. We were very concerned about this situation happening to us so we resolved to ensure that any business consultant or business entity we dealt with understood the true nature of the telecommunications market in Ghana.
As we begun to implement the project, we had to also deal with a major change in the business relationship with AT&T. Prior to the completion of the project, AT&T was broken up into three separate companies- AT&T, Lucent Technologies and NCR. AT&T’s strategy for Africa changed, but the good news is that they had built the project for us to start. Our business relationship was shifted to Lucent which inherited responsibility for AT&T manufactured equipment. We survived the reorganization of AT&T and that gave us the encouragement as a Ghanaian local company to also re-organize ourselves and create what we have today as one of the first Ghanaian companies to operate telephone system here.
This is basically how we started. We are now building the largest telecommunications company in Ghana today with an all round telephoning component.
Does that include mobile and land lines?
The telecommunications regulations law of today operates what we call the "duopoly" which gives Ghana Telecom and Westel monopolies for the provision of land lines for five years. I think two or three years have almost passed, so what we are trying to do is to build a network to prepare for that opportunity within the next two years. Most of the existing companies do not have the rural strategy. They are all urban so we are trying to build a very broad network that will cover the whole of Ghana and bring the prices down.
What is the coverage of the country at the moment?
Today we cover Accra and Tema but by September we should be covering fifty percent of the country. We are building about 120 cell sites in the country having begun with only three.
Coming back to the equity share holdings, how is the company divided up and who owns the company now?
When we finished (with our search for a strategic investor) we managed to attract an investment from Hutchinson Telecom International of Hong Kong. They were convinced of the viability of our business plan of moving to the rural areas although other major companies had declined our offers on the basis that the market is too small.
Did Hutchinson approach you or did you approach them?
We announced our plans to seek a strategic investor at various international forums. Hutchinson approached us through James Teffel after we had told him to look for a possible investor in our business plan.
We were initially informed that he was working with a company in India at the time which was doing what we were trying to do. They also wanted to know if there could be any entry into Africa. James Teffel wanted permission to speak to executives of this company on our behalf and we gave them the go ahead. Since they got interested, we sent them a copy of our business plans.
What advantages is Hutchinson bringing to Celltel?
The relationship between Celltel and Hutchinson is a win-win one with several advantages. This relationship developed from the position of transparency. We informed Hutchinson from the beginning of all our business plans and how we plan to achieve them. Our primary goal is to be the largest, the cheapest and the highest quality Telecommunications Company in the country.
It was difficult for them to understand that at the beginning but as we moved along with the negotiations and told them where our markets are, they became interested. We just had a board meeting last Monday and the areas that we are developing are becoming more and more interesting. One of the markets that we are trying to target is that of the Ghanaians abroad. There are more than half a million Ghanaians living in France, in the US and most of them are from the villages in Ghana, so one of the things we are doing is to tell them about our strategy. If any of them needs a phone for a relative here in Ghana, and they inform us of where he is, we will make every effort to provide the service. We have conducted surveys of this idea with tremendous results. Some people are prepared to pay fifty dollars a month for such a service if it can be provided. This has given us close to fifty-six thousand potential subscribers today. One other thing is that there is a big void in the country today in data communication and high speed linkages on the Internet, so we are also building our network to have the means to do data communication and Internet provision. We want to provide 128K links for people to transmit their images to both voice data and video. We have a new company coming up called Alltel which will provide the voice data on video and the Internet. This has also attracted other customers to Celltel, for example for linking up bank’s ATMs. So one project that we scoped is now trying to benefit all the other sectors. Our projection is to achieve one hundred thousand subscribers within twelve months.
And how many do you have at the moment?
We have ten thousand today. We expect to reach one hundred thousand customers in three years and also to bring the prices down. Today Mobitel, Spacefon and others sell their services at approximately forty-fifty cents a minute, which is too expensive for the market meaning that the numbers are not going up. So we are trying to lower the price by about ten to twenty cents. The cost of entry for the phone must not be more than fifteen hundred dollars. This way we target young executives, rural areas and what-have-you.
| Perhaps one of the most important and interesting things we are doing, and which is working out well, is trying to create tele-centers all over the country. Everywhere that our services get to we will put containers with phones inside for the villagers or travelers to use and in that container we will try to put a maximum of six computers to use as Internet cafes. One of the reasons we want to do that is because when you are abroad and you mail a letter to Ghana it takes about two or three weeks. We are trying to create Internet and e-mail services by way of these containers so that people abroad can send mail to these villages. We will franchise it as a Town Development Company.
These are ambitious plans for a young company. How are you going to get all the human resources and the technology to implement all these plans?
I am giving a speech at a school on Saturday and the title of my speech is "Human Resources, Ghana’s wealth". If there is anything Ghana has it is human resources. All over the country and all over the world. What we are doing is hiring Ghanaians from abroad to come home and work. Mr. Boakye, the Managing Director of Celltel (who you met last time) was recruited from Motorola. We have also recruited other Ghanaian professionals from the United States from different capacities (from Ameritec, a telecommunications company in the U.S.), so there are a lot of human resources. We are hiring people from various operations, wherever we can get people who are interested in coming back home.
What about foreign investors who would want to come and participate in Celltel and some of these projects, how could they help you; in what areas are you looking for investments?
We are not interested in money but in building partnerships. The good news is that we managed to find Hutchinson Telecom, who is interested in our vision and has joined us as a partner. Now Celltel is the only company in Ghana that has a guaranteed funding for its infrastructure and expansion. We are looking for partners in the provision of value added services like data, Internet services, as well as in other sectors. We are open to partners but not financiers because if you are financiers we already have all the emerging markets funding here. What we need though is technological transfer which we want in the country and in the company. We are projecting to have over a thousand employees within the next three years, all over the country, both formal and informal and also trying to do a lot of training in human resource development. The guy that we are hiring will come back and do the training programs and we are hiring a lot of people from the polytechnics, the technical schools and the universities. If you were to be at Celltel this morning, the whole place was full; so many young applicants. We feel that the human resource is the key for this country. The development and the technological transfers are the keys for this company. We are not just a dry telecommunications company like Spacefon and Mobitel, we are a local company that is trying to provide a company to train and develop its own resources as well.
So where do you see Celltel in the near future, in three or four years time?
Our vision is that Celltel will become the future of African communication. This is the concept that we have. Yesterday we had a meeting with some Nigerians in trying to find ways to extend our services into that country. It is not that easy to find investors in Africa today in any of the telecommunications companies, even the telecoms, because of these same dry services. Ghana today has about eighteen million people and two hundred thousand telephone lines in total, including Mobitel, Spacefon and Celltel. Now tell me how saturated the telecommunications services is! Nigeria has one hundred and twenty million people with half a million telephone lines. South Africa is the same. It is the same everywhere in the rest of Africa so we think that only Africans can do the concept that we are trying to develop. One of the problems that I have seen for the last ten years that I have been doing this business is how to minimize the risk element. The risk element for any investor coming into Africa is pretty high. They do not know the politics. Here in Ghana nobody knows what the politics will be in the year 2000. Should you invest or not? and these are the issues that we think only the Ghanaian and the African can deal with. Everywhere you go in the world Ghanaians are there; the Secretary General of the U. N., the World Bank, Alcatel, Bell Laboratories, Philips, all in the technology in which I am.
Do you feel it is your responsibility to develop your sector?
My responsibility and contribution as a Ghanaian is to develop this area. Celltel combined with my other companies today has about five hundred employees. I started twenty years ago as a single person with twelve pocket calculators I bought at Radio Shack. Today I own various groups of companies in technology in which a lot of young guys are being trained. I am very strict on training both in-country and abroad for my engineers and technicians, so a lot of them were trained by Lucent, Bell Labs; some of them just came from Holland last week after six months training. This gives them the moral booster. Some people in this country wonder why my employees stay with me, work with me. I say they do because I create the opportunity for them for employment which does not exist in many places in the country. And one of the greatest problems that we have in Africa is that it is considered that you must be a university graduate before you can get a top job. I am trying to reverse that. To select people from the technical schools and train them to give them the opportunity to use their brains, and you will be surprised at the kind of sharp brains that we have in this company.
How many of such people have you actually recruited?
We have over a hundred and twenty right now all over the place.
They are not university graduates?
No. We are hiring another eighty-five at the end of the year in various areas.
So that is equal opportunities for all?
Yes, equal opportunities for all because what I have seen in Ghana is that when students come out of university they are very academic and not very practical or hands-on. But from the technical schools they are, so if you want to hire people now you must be an equal opportunities employer. If you hire a person with a college degree then you have to give him a title such as an "Officer" with commensurate pay to match, if you hire a person without a college degree, you can call him a "Representative" with a lower salary. But you must ask yourself, "What is the value of each to the company?" These are the kind of things we are doing and it is working extremely well.
On a more personal level, what are you most proud of either since you have been chairman of Celltel or throughout your whole career?
One of the things I am proud of or that people think I am proud of is that when I came to Ghana the name Kludjeson was nothing but now it is a household name. Everywhere, because of what I stand for; development of people, development of the human to get the best out of them. When I am negotiating on any business deal, I am not interested in anybody telling me about the money, I can always find the money if I have the right vision. One thing I am very proud of and happy about is seeing people employed. Ghanaians everywhere will tell you the economy is bad but I am hiring in the numbers, creating opportunities for them. And one of the things I do as a businessman is create business units because there are talents that are available. Thus developing the human resources and manpower is one of the things I cherish most. And I think there is plenty of it around. We do not want to worry about the money. We are prepared to be in your country. I am just developing someone in Abidjan, finding about twenty to fifty thousand dollars to put into his business to develop the same concept. Do not worry about the policy, do not worry about the legislation, lets just start something and create it. Everywhere you go they are there. This is one of the satisfactions that I think I am getting from this. I am not interested in the money. It will come.
As a final question, what will be your message to our 4 million readers in the States about the general situation of Ghana and about coming to work with you at Celltel?
The message I would like to give to Forbes readers is that one of the problems I have seen, and I am sure you have also seen is that of preconceptions. Ghana is a beautiful country but before you came people probably told you to watch out. One thing I want to say to everybody is that Ghana, especially, is the place to be, and the time is now. They should come in to help build the country, to help in the crusade of Ghana’s vision. Not necessarily Vision 2020, but Ghana’s vision as a country that is moving forward. It will create a country worth living in, it will create a country worth working in. I did a television program just this morning for the Emancipation day and my message is that I am welcoming everybody back home to join the evolution not the revolution. The evolution of development, creating what Ghana needs because we need brain power, not financial power. With this we will develop the kind of financial power that the country needs.
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© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Ghana published in Forbes
December 13th 1999 Issue.
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GHANA
