Thursday, August 14, 2008

Ghana - privatisation

D-Day For Parliament…

Parliament will today begin a vigorous debate on whether or not state-owned telecommunication firm, Ghana Telecom, should be sold to British telecommunication giant, Vodafone. Parliament, which was supposed to resume sitting at the end of this month, had to be prematurely called back today to measure and evaluate the transaction and subsequently approve or reject it.

The largest telecommunication company in the world is offering a price tag of $900 million and an annual investment of $100 million for five years. Most financial analysts to whom Daily Guide spoke on condition of anonymity have given their blessings, explaining that GT needs to be recapitalized in order for it to compete favourably in the telecommunication industry which has now assumed impeccable heights. Analysts in their assessment of GT’s financial statement have noted that the state-owned firm has not been faring well, hence the need for additional capital injection from an international partner to turn around the fortunes of the company.

Parliament’s decision will greatly focus on GT’s inability to pay any dividend to government for sometime now. According to a financial analyst with SEM Capital who spoke to this paper, GT’s mobile service subsidiary, Onetouch, has fizzled out of competition since the beginning of last year, losing out its position to Tigo, which now has a mobile subscriber rate of about 3 million, compared to Onetouch’s 1.7 million. He subsequently challenged Ghanaians and those who have the country at heart to check the financial statement of GT in respect of income statement, cash flow and balance sheet and find out whether the company is performing.

Analysts also say the unimpressive financials could also derail any listing of the company on the stock market for now since it will take a long time, perhaps over a year, before the Securities and Exchange Commission (SEC) will approve it, by the time new competitors, Zain and Glo would have progressed in the industry. The heated debate over the sale of GT to Vodafone has assumed some political twist, with the public listening and watching to see if members of the House whom they voted for will do justice to the deal or not. The most important issue, however, will be the points to be considered before the deal is approved or rejected.

When government announced that Vodafone had been awarded 70 percent stake in GT a few weeks ago, it reiterated that a number of benefits were expected to be accrued from the deal as Vodafone will bring to bear its experience in over 5 countries including Egypt and Germany and other partner networks in 42 countries. With over 260 million customers worldwide, the statement added that Vodafone will provide the best of telecommunication services for Ghanaians. It is also expected that its brand and customer propositions such as its ultra-low cost handsets will also help accelerate GT’s growth, not forgetting the injection of substantial investments into the economy.

Just last week, some concerned workers of the company raised some pertinent points that need to be carefully looked at. First, the issue of service provided by GT’s Onetouch to its customers which is not up to standard according to the National Communications Authority ratings, needs to be considered since this could push the company out of competition. “In its current state, GT cannot afford the 3G licence which could do the trick to service enhancement that Zain may be operating”.

The losing out of its biggest corporate customer, Nestle to rival MTN about three months ago because MTN gave a good package, should also be studied. This throws a caution to the 4,200 workers of the company. Furthermore, all the other mobile service operators, namely MTN, Tigo, Kasapa, Zain and Glo have international dimensions and they operate in some markets in Africa and the Middle East. Last but not the least, the decline in Onetouch revenue from its international roaming services should also be thought of carefully.

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