Phyllis D. Osabutey
3 July 2008
THE MINORITY in Parliament has questioned the supposed confidentiality, lack of openness and transparency with which government is conducting negotiations regarding the privatization and sale of majority shares in Ghana Telecom (GT), between the Government of Ghana (GOG) and Vodafone plc. UK.
The Minority also queried why government had gone contrary to requirements it placed in the advertisement for the sale of GT by adjusting the shares on offer from 66.7% to 70% and also negotiating exclusively with only Vodafone plc. UK, without considerations to other bidders, who were likely to offer higher bids than the former.
Speaking at a press conference in Accra yesterday, the Minority Ranking Member on Communications, Honourable Haruna Iddrisu stated that Vodafone's offer of $960 million with stringent caveats is far below the Minority's expectation of $1.5 billion or more for the value of GT, which is subject to GT's own internal valuation and audits, to be conducted during its due diligence process.
He said the amount is paltry, in view of the fact that the National Fibre Optic backbone, constructed at the cost of $100 million with a loan from China, which has never been part of GT's assets, is being included in the transaction. With regard to this, the Minority says "we demand to know why this has been included as part of GT's assets, as the second phase of this ICT infrastructure highway is yet to commence."
Additionally, he observed that in the 2007 supplementary budget estimates, government projected to earn $500 million from the combined sale of GT and Westel, which the Minority described as abysmally low and unrealistic.
He said, upon government's advertisement, offers were received from major prospective buyers, including Egypt Telecom, France Telecom, Globacom and a Ghanaian led Consortium as well as Portugal Telecom and an entity from India who also expressed interest. According to him, France Telecom's bid appeared to be the highest, estimated at $550 million for 60% but negotiations were staled in December 2007, at due diligence stage, primarily due to "unrealistic asset valuation expectations of Government of Ghana."
He expressed disappointment that though in January 2008, GOG 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.
"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", he charged.
He stressed that the Minority was dissatisfaction 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 in addition to the fact that a 10% increase in penetration in the Telecom sector generally results in a 2.5% increase in Gross Domestic Product (GDP).
The MP for Tamale South further raised an issue with the selection of Vodafone, which is a mobile only network operator, while a major requirement in the advertisement by government for a strategic investor was for stated criteria of significant fixed wire - line operations experience.
This, the Minority says flaunts the GOG's own non-negotiable selection criteria that states that "the successful bidder must have significant experience operating fixed wire - line telecommunications network with (a minimum of 10 million lines/subscribers.)"
In the Minority's opinion, Vodafone does not meet this criterion since it is a wireless mobile network operator that has no real fixed network operations record-experience and no dedicated unbundled broadband internet, hence it may abandon fixed network operations in favour of highly profitable mobile wireless unit, unless there are legal safeguards.
"The current situation is clearly against and/or in breach of established norms and standards for the privatization of a Telecom entity as is required by the International Telecommunications Union (ITU)", they noted.
Honourable Iddrisu explained that Ghana's critical electronic communication apparatus for innovative and efficient communication services requires the development of the fixed network such as voice, fax, internet, corporate and personal data.
He stated that this makes it imperative for things to be done right since GT is the only company with communication assets that are central to the provision of broadband services, critical for utilizing Information Communication Technology (ICT) for economic growth and social progress.
He pointed out that the Minority was not against the sale of GT but against the lack of fairness in the bidding process and the fact that its attempts to seek clarifications from Vodafone plc. UK and government have been futile.
According to him, the Minority is raising the concerns because there is a mysterious shareholding matter in relation to Vodafone plc. UK's 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 previously not been disclosed as a shareholder", he disclosed.
In view of this, the Minority wants to know Vodafone plc. UK's interest and whether they are coming as a subsidiary, an associate or a joint venture to avoid a repeat of the Kenya Safaricom experience in Ghana. "We can only hope that any future attempt by government to offer the rest of the 30% shares of the remaining GT will not suffer similar fate", they indicated.
They further averred that they were aware of government's desperate need for cash to finance a gaping budget deficit, but "it is important to advise government to take into serious consideration the supreme interest and value for money."
In conclusion, they stated, "the Minority reminds Government of the provisions of the constitution and the Public Procurement Act, and calls on the Government and Vodafone plc. UK not to conclude the transaction without Parliamentary approval."
Other members of the party who attended the press conference were Honourable Benjamin Kumbour, MP for Lawra Nandom and Honuorable Ayariga Mahama, MP for Bawku Central, among others.
Meanwhile, the Ministry of Information and National Orientation has announced that Government is in the final stages of concluding an agreement with one of the leading companies in the world of telecommunications for the acquisition of 70% shares in GT.
This was contained in a press release issued and signed by the Minister, Honourable Stephen Asamoah-Boateng, yesterday, which stated, "negotiations are far advanced and details will be placed in the public domain accordingly." It added that the agreement, when concluded would raise the level of efficiency and technical competence of the telecom industry in Ghana.
According to the Minister, "the opening up of the telecom industry and the fair competition that it will ensure will be beneficial to consumers and help to boost Ghana's image as the telecommunications hub in West Africa."
He said it is worth noting that the negotiations is in fulfillment of government's objectives and financial plans laid in the 2007 Supplementary Budget, to divest certain state-owned companies for the benefit of all Ghanaians.
Be the first to Write a Comment!
Copyright © 2008 Ghanaian Chronicle. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
