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Ghana: Minority On War Path - Sale of Ghana Telecom
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Ghanaian Chronicle (Accra)
3 July 2008
Posted to the web 3 July 2008
Phyllis D. Osabutey
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.
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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.
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