NDC Sold GT

45% of Ghana Telecom Sold For $150 Million In 2000

Throughout the debate surrounding the sale of Ghana Telecom to Vodafone, the hypocrisy brought to bear by members of the ruling National Democratic Congress has simply been amazing and this can be perfectly seen in the sale of Ghana Telecom to Telekom Malaysia.

The deal to sell 30% of Ghana Telecom to Telecom Malaysia at the time was described by telecommunication analysts as the worst deal any third world government could enter into with a foreign investor, particularly for a national asset which most multinationals would offer an arm for.

In 1996, the NDC government made all the overtures of a government apparently prepared to divest part of GT to the company with the best deal on the table. Two conferences were held. Big multinationals from France, Holland and Britain came to the country.

According to representatives of France Telecom and Alcatel, the government of Ghana was in no mood to play according to its own trumpeted rules. In the words of one international expert in telecommunications, they were pretty much fogged off by non-cooperation on the part of the Ghanaian Government. They were basically told you are not wanted, mate.

No wonder when tenders were opened there was only one offer- from Telecom Malaysia. According to the expert, who requested anonymity, this situation of only one interested company contrasted quite glaringly with the sale of 32 per cent of Senegal Telekom to France Telecom for $100M a few months after the sale of 30% of GT to Telecom Malaysia.

In 1997 the state sold a 30% stake in GT to the G-Com consortium, in which Telekom Malaysia (TM) held an 85% stake, for USD38 million. Telecom Malaysia was given a five year management contract to run the company for the duration of GT's fixed line duopoly with new entrant Westel.

As if the Mills-led Economic Management Team negotiated the deal while sleep-walking, the contract, which saw Telecom Malaysia as a strategic investor, gave full management control to the Malaysians, including 51 per cent voting rights.

To show the extent to which the NDC sold Ghana short, in the desperate months leading to the 2000 general election, they rushed through a deal to sell a further 15 per cent worth of shares to Telecom Malaysia, for which the Malaysians paid $50m upfront.

However, the NDC failed to deliver 15% of the shares for which they had collected $50 million. Telekom Malaysia, chairman Radzi Mansor hinted that Telekom was still in talks with the Government of Ghana to recover a US$50 Million deposit, following the termination of the deal to acquire an additional 15 Per cent stake in Ghana Telecom.

Telekom Malaysia subsequently sued the Government of Ghana in an international court and the Government had to pay heavy penalties under a settlement agreement.

After five years of providing jobs and businesses to Malaysians to the tune of $500m, the disgraced Telekom Malaysia demanded $300m as a farewell package. This was 789 per cent more than what they paid Ghana for, milking its telecommunication cow dry.

By the time of the contract's expiration TM presided over a poorly configured network, with just 275,000 fixed lines in service, well short of its mandated 400,000.

Thus the National Communications Authority (NCA) slapped a multi-million dollar fine on GT when the company’s managers failed to provide the number of telephone lines as contractually promised by Telekom Malaysia.

The bottom line is that the woes of Ghana Telecom began with the NDC. As at 2000 the NDC sold 45% of GT to Telekom Malaysia for $150 million without competitive bidding and as such valued Ghana Telecom at $330 million as at the end of 2000.