Vodafone deal reposes vendor confidence in GT - CEO

Accra, July 28, GNA - Ahead of Parliamentary decision on the sale of 70 per cent of Ghana Telecom (GT) stake to Vodafone International Holdings BV, dealers such as vendors, suppliers and creditors, have started going easy on GT and rather "rushing" to deliver services to the company on hearing of the possible Vodafone takeover.

Mr Dickson Oduro-Nyaning, Chief Executive Officer (CEO) of GT told the Ghana News Agency (GNA) in an interview that vendors, suppliers and creditors, to whom GT owes hundreds of millions of dollars, have since the Vodafone deal went public, gone slow on their rigid demands for debt repayment and have rather moved in to help mitigate GT's network problems in anticipation of continued business relations with Vodafone. "Even the banks, which have for sometime now turned down our requests for loans to clear goods at the ports and or to pay for vendor services, are now running to us and offering cheaper loans," the GT boss said. He noted that, that was a clear indication that the Vodafone deal was a good one, which promises to make GT attractive to creditors, vendors and suppliers and thereby move GT to the top of the competition. Mr Oduro-Nyaning said GT and its customers stand to benefit from the confidence vendors, suppliers and the banks have shown in the more experienced and financially stronger Vodafone even before the deal was approved by Parliament.

Government is currently seeking Parliamentary approval for 70 per cent sale of what is now called the Enlarged GT Group, including the GT fixed lines network, Onetouch (Mobile network), Exzeed (the call centre), the National Fibre-optic backbone and the Fibre-optic network of Volta River Authority (Voltacom), to Vodafone at US$900 million. In what seemed to be a justification for governments move to strike that deal, GT's own financial statement for 2007, made available to the (US$5,000), which represented the amount government allocated to GT in 2008 as against an estimated US$400 million plus debt.

But critics of the deal have raised questions about the actual value of the assets being sold to Vodafone for a "paltry" US$900 million. Indeed they have questioned why the strategic investor only bought the assets of GT and left the US$400 debt to be paid from the US$900 million. Security concerns have also been played out in the debate and some have called for wider public discussions of the matter before a decision is finally taken. Suggestions have also been made that shares should be floated on the Ghana Stock Exchange (GSE) for citizens to buy and own GT instead of selling majority shares to a foreign company.

But Mr Oduro-Nyaning argued that floating shares on the stock exchange at this stage when GT was almost in the red did not make financial sense, saying that should shares be floated, proceeds from the sale were supposed to go into the consolidated fund since government owned 100 per cent of GT. "It would not make financial sense to reinvest those proceeds into GT because it would look like government reinvesting its own money into GT and yet have to pay dividends to citizens who bought shares at the end of every financial year. "This kind of move will only lead to more debt and those who are making those suggestions are doing so out of ignorance," he said. He said the other disadvantage in going to the stock exchange was that in the event of GT going for loan or for supplies and services on credit, it would be difficult to provide a readily available guarantee since it usually takes protracted Parliamentary approval to get a guarantee from the state in such circumstance.

The GT boss said with the coming of Vodafone, GT's creditors would not even ask questions about the availability of a guarantee when providing supplies and services on credit because they have confidence in Vodafone. "Moreover Vodafone is bringing additional US$500 million capitalization, which is what GT needs most at this moment," the GT boss said. On the issue of the real value of the 70 per cent shares, Oduro-Nyaning questioned why critics were raising "hell" over the figure at this time, saying that last year GT advertised 66.7 per cent shares of GT for sale and no one questioned that, even though that was also majority shares. He said initially 17 companies excluding Vodafone, but including Vodacom South Africa, a subsidiary of Vodafone bided for the shares. "Six of them were short-listed, comprising France Telecom, Portugal Telecom, Etisalat of Dubai, Singapore Telecom, Belgium Telecom and Vodacom South Africa," he said.

Mr Oduro-Nyaning said out the six, three companies, France Telecom, US$520 million, Portugal Telecom US$484 million and Vodacom South Africa, US$355 were short listed but Vodafone came in much later and offered US$900 million with an additional US$500 million capitalization and that was considered a better deal. On the issued of the Voltacom fibre-optics facility, Oduro-Nyaning indicated that more than 90 per cent of that facility currently laid fallow as the Volta River Authority had only set aside 10 per cent of it for its use. "Even the 10 per cent they have set aside, they are using only seven per cent of it, which is a negligible fraction of the whole," he said.

During the Ghana 2008 soccer tournament, government granted permission for GT to use the VRA fibre-optic facility for a test run GT on lease and pay an agreed 30 per cent of monthly charges. Mr Oduro-Nyaning noted that it was not as if the Voltacom fibre-optics facility was in full use at VRA and had been taken and added to the Vodafone deal, but it was already being used by GT. He noted that the critics who valued the assets of the Enlarged GT Group in billion could only be doing an over valuation of those assets, because what Vodafone offered was not far from the actual value of all of the assets combined.

The GT boss said due to the current financial state, GT had loads of equipment at the ports without funds to clear them and as a result, there was a hold up in it roll-outs because there was no adequate technical backup capacity to support additional rollouts. Staff of GT confirmed these sentiments to the GNA saying that there was general frustration at GT, especially among the technical staff due to lack of equipment to work with. They added that there was also the non-payment of Pensioners benefits for over year due to lack of funds.

Meanwhile, some of the most valuable internally trained human resource personnel at GT, especially the technical staff were leaving the company in their numbers to work with GT's current and future competitors. "GT has about 1,000 technical staff out of 3000 employees and most of them are being poached by our competitors. In fact lots of them have placed job application at MTN, Tigo and even the with the new comers like Zain and Globacom," the staff said.

The staff members expressed the hope that with the investor capital, GT was poised to take its rightful place at the top in the local telecom market and also become attractive to quality staff and even subsequent shareholder. They expressed confidence that like in the case of Safaricom of Kenya, which became attractive after Vodafone had invested into it, leading to over subscription of the Kenyan government's own floated shares, when GT became more attractive, government could then float some of its 30 shares for citizens to buy into a more profitable and viable GT.