CPP offers alternatives to Vodafone deal

Accra, Aug. 5, GNA - The Convention People's Party (CPP) on Tuesday offered what they described as a better alternative framework to the Vodafone pact which would salvage the beleaguered Ghana Telecom Company. The offer capture in the party's general Economic Policy made available to the Ghana News Agency in Accra, said it was "imprudent" for the manager of any company or economy to sell off long-term assets to address short-term problems.

"By so doing, you may survive in the short-term but you compromise your long-term viability and indeed survivability. It is even worse when that sale involves the transfer of majority interests in a strategic asset to a foreign 'strategic investors' whose motives and plans remain murky solution," the CPP said.

The CPP, in an apparent response to a challenge thrown by the Minister of Economic Finance and Planning, Mr Kwadwo Baah-Wiredu, for critics against the sale of Ghana Telecom to Vodafone to provide alternatives to salvage the beleaguered company, called for the stoppage of the sale immediately.

The party emphasised its commitment to the belief that "the Black man is capable of managing his own affairs". "Temporary problems in the course of managing our affairs should not form the basis for us to doubt ourselves and give ammunition to our detractors."

The CPP suggested short-term and long-term measures to improve the quality of GT's management for now and the future. These include recapitalization of GT by using part of the US$300 million that government is borrowing "to accommodate Vodafone's unreasonable demands for debt-free assets" and prosecution of GT management, including the Norwegian management team, for the adverse findings of financial improprieties made against them by the company's internal auditors to recover millions of dollars and invest them in Ghana Telecom.

It also suggested the probing of circumstances surrounding the Iroko bond of US$200 million, which places undue restrictions on GT's ability to invest and to grow. It asked: "Was there self-dealing in the transactions on the part of management and the board?" The CPP also called for the transaction adviser to be held culpable for such "an injurious transaction to the nation", de-politicisation of management of GT and make it transparent, such as compulsory quarterly and annual publication of financial and management reports, introduction of management contracts, complete with targets and penalties for non-performance.

It said there should be a purge of GT Board of Directors of political appointees and advertisement for potential board members who can demonstrate at properly constituted interview panels that they had the experience and competencies to help shape the vision and operations of GT.

The CPP also called for cessation of talk only about GT's gross debt and a look at its net debt, which is the gross debt GT owes others minus the debt that others owe GT.

"This yields a much better picture of the financial health of the company and provides the basis for government to collect all the inter-connectivity arrears and other debts, including those owed by government agencies, for the effective recapitalisation of GT." For the medium-to-long term, the CPP called for reform of the laws for distressed businesses, whether state- or private-owned, to file for bankruptcy and give them the space to restructure their operations and become viable again without getting sold to predatory "strategic investors".

There is also the need to reform governance at all state-owned enterprises and open all managerial and board positions to public competition that will unearth the best that this country has for its development.

Answering the Finance Minister's statement that GT's current financial state and the future of the 4,200 workers are endangered and that opponents of the GT-Vodafone deal should not hold the workers to ransom, the CPP said the sale would rather endanger the employment of GT's workers and plunge the Government of Ghana further into debt. "According to Section 4.2 of the Sale and Purchase Agreement (SPA), which was written by Vodafone and simply given to our officials to sign, the government of Ghana should 'unconditionally and irrevocably' agree to contribute up to US$40 million for Employment Restructuring Expenditures (i.e., retrenchment).

"In addition, the SPA says that the 'Government of Ghana undertakes to fund GT from time to time for the social costs and other liabilities incurred in connection with the employment restructuring programme of the Enlarged GT Group.'"

The CPP said this provision was part of a network of liabilities in the SPA which Vodafone cleverly shifted to the government of Ghana while it preserved for itself all the benefits of the sale, including the right to ship out of Ghana 70 per cent of profits with the least amount of investment.

On the addition of the National Communication Backbone Company the Volta River Authority's Fibre Optic known as Voltacom, the CPP said throughout the debate, government officials had said that the purported valuation was done of Ghana Telecom, and not the Enlarged Ghana Telecom Group, which comprised Ghana Telecom Fixed Networks (landlines and data)(SAT-3), One Touch, exZeed call centre services, VRA - Voltacom Subsidiary (Fibre Optic Network) and Ministry of Communications' (National Fibre Optic Backbone).

"It is important to note that government is yet to publicly produce evidence of the combined valuation of these important strategic assets whether undertaken by it or its advisors. "In its letter of 7th July 2008 to Parliament, the Ministers of Communications and of Finance stated that the enterprise value of US$1,286 million was 'implied' from Vodafone's offer of US$900 million.

"If there is an objective and non-implied valuation of this Enlarged GT Group, we call upon government to make it public. We humbly submit that an 'implied' value should not be used as the basis for disposing of important national assets." The CPP said by constantly referring to the "$30 million in the National Communication Backbone Company and the $55.5 million in the Volta River Authority's Fibre Optic known as Voltacom", government was confusing the cost of an investment with its value, and providing further grounds to show why this transaction should not proceed. Minister's Statement (as quoted by Daily Graphic): "In any case, the minister stated, the government valued Ghana Telecom at A2 1.286 billion and it was only Vodafone that offered 70 per cent of that value."

The CPP said if government "valued Ghana Telecom" alone at GH¢1.286 billion, then what was the total value of the Enlarged GT Group, including all its fibre optics assets. The CPP said government had said repeatedly that Vodafone "will invest US$500 million over five years", but there appeared to be no written commitment anywhere to support this claim. "Unlike the previous agreement with Telekom Malaysia, which had performance benchmarks, timelines and a schedule of penalties for any non-performance, the SPA with Vodafone has no such protections and it saddles the government of Ghana with medium-to-long term liabilities that far outweigh the putative short-term benefits of the US$900 million (even less, once our debt obligations are subtracted)." CPP repeated that this deal would be injurious to Ghana and must be abrogated.