STATEMENT ON THE PRIVATIZATION OF GHANA TELECOM (GT) BY THE GOVERNMENT OF GHANA TO VODAFONE (plc)UK READ BY THE MINORITY RANKING MEMBER OF THE COMMITTEE OF COMMUNICATIONS, HON. HARUNA IDDRISU MP.
A. Distinguished ladies and gentlemen of the press welcome to this press conference. We have invited you here this morning to raise issues and to share the minority’s concerns with the on-going “confidential” negotiations between the Government of Ghana and Vodafone plc UK for the privatization and sale of Majority shares 66.7% or 70% shares in Ghana Telecom (GT) to a strategic investor.
B. In October 2006, the Government of Ghana begun a process of identifying a strategic investor to acquire between 55% and 65% of the equity of Ghana Telecom (GT) and to take over management of Ghana Telecom (GT) operation. Subsequently, transaction advisors were selected and the government advertised for the sale of 66.7% shares. Now we are been told that has been adjusted upwards to 70% contrary to Government’s own advertisement.
C. Offers were received from major prospective buyers including Egypt Telecom, France Telecom, Globa Com and a local Ghanaian led consortium. There was some interest expressed also by Portugal Telecom and another entity from India.
France Telecom bid appeared the highest and negotiations began. In December 2007, negotiations were stalled at due diligence stage primarily due to “unrealistic asset valuation expectations of Government of Ghana”. France Telecom’s offer was estimated at $550 million for 60%. In January 2008, Government of Ghana announced the indefinite suspension of the sale due to its inability to reach satisfactory terms with any of the bidders. In March 2008, overtures were made to Vodafone plc UK seeking an offer. Vodafone’s offer as we are told from Government’s own sources was $960 million with stringent caveats still far below the Minority expectations of $1.5 billion or more for the value of GT(subject to its own internal valuation and audits to be conducted during its due diligence process). However it is significant to note that in the 2007 supplementary budget estimates government projected to earn $500 million from the combined sale of GT and Westel. The Minority did not hesitate in describing these figures as abysmally low and unrealistic.
The Minority wishes to express its disappointment at the general lack of openness and transparency in the privatization of the major National asset (GT), which has major National Security and Economic implication. It is well documented that a 10% increase in penetration in the Telecom sector generally results in a 2.5% increase in GDP.
The minority wants to know why Government is exclusively negotiating with only Vodafone plc UK without consideration for other bidders who are likely to offer higher bids than Vodafone, and address the socio-economic needs of the country. The current situation is clearly against and in breach of established norms and standards for the privatization of a Telecom entity as required by the International Telecommunications Union (ITU).
The question that needs to be answered is why the privatization process of GT could not be subjected to a competitive public tender process for all interested bidders as required by the Public Procurement Act of Ghana?
D. Ghana Telecom is the only company with fixed communications assets. Fixed communication assets are central to the provision of broadband services, the critical need for utilizing ICT for economic growth and social progress.
Ghana’s critical electronic communication apparatus for innovative and efficient communication services requires the development of the fixed network i.e. (voice, fax, internet, corporate and personal data).
E. A major requirement as was advertised by government for a strategic investor was for a stated criteria of significant fixed wire – line operations experience. The selection of a mobile only network operator (Vodafone) clearly flaunts the Government of Ghana’s own non – negotiable selection criteria that states the successful bidder must have significant experience operating Fixed Wire – Line telecommunications network with (a minimum of 10 million lines/subscribers). This requirement cannot be met by Vodafone plc UK as it is a wireless mobile network operator and has no real fixed network operations record – experience, no dedicated unbundled broadband internet experience. As such they may abandon fixed network operations in favor of highly profitable mobile wireless unit unless there are legal safeguards.
F. We have in the last few days been seeking clarifications from Vodafone plc UK to know their interest whether they are coming from a subsidiary, an associate or a joint venture? The responses are not forthcoming.
Neither Government nor Vodafone is forthcoming with the answers. We are raising this concern because of the mysterious shareholding matter in relation to Vodafone plc acquisition of Safaricom, Kenya’s largest and most profitable company.
Safaricom was officially declared to be a partnership between the National landline operator –Telkom Kenya (with 60%) and Vodafone plc UK (with 40%). It was found to have a third shareholder through an unregistered company known as Mobitelea, which owned 5% of the shares triggering a parliamentary inquiry into the ownership changes. Mobitelea had not previously been disclosed as a shareholder in the deal.
We need to avoid a repeat of the Kenyan Safaricom experience in Ghana. We can only hope that any future attempt by government to offer the rest of the shares (30%) of the remaining Ghana Telecom (GT) will not suffer a similar fate.
G. We are aware of Government desperate need for cash to finance a gaping budget deficit. However, it is important to advise government to take into serious consideration, the supreme national interest and value for money, for this all important exercise. Things must be rightly done!
H. We are also appalled at the inclusion of the National Fibre Optic backbone constructed at the cost of $100 million with a loan from China, which has never been part of Ghana Telecom’s (GT) assets being included in this transaction. We demand to know why this has been included as part of Ghana Telecom’s assets as the second phase of this ICT infrastructure highway is yet to commence.
The Minority reminds Government of the provisions of the constitution and the Public Procurement Act and calls on the Government and Vodafone plc not to conclude the transaction without Parliamentary approval.
