Saturday, August 16, 2008

Ghana - Vodafone wins Ghana Telecom

It’s a deal! The Sovereign Parliament of Ghana has spoken

After months of debate, demonstrations, bickering, court action, even threats of breaking international agreements by political forces arrayed against the sale of 70% of Ghana Telecom (GT) to Vodafone PLC, the country’s legislature yesterday agreed for the sale of part of Ghana Telecom to UK mobile giant Vodafone to go on. It was a major debate that saw Parliament House full to capacity yesterday and the decision arrived at would be one of the most far-reaching in the history of telecom development in Ghana.

The government’s plan to offload 70 per cent of its shares to Vodafone UK met stiff resistance from some political, civil society and religious groups in the country. Often more parochial and sentimental than economic the opposition to the sale was predicated on two arguments:

That the sale price was too small and that Ghana should not sell shares of such a “strategic national asset.” The rest was nit-picking at details of the sale agreement.

Some groups including opposition political parties argued that the $ 900 million for which the company’s 70% is being sold amounts to a give away.

After five hours of intense debate characterized by raucous claims and counter-claims by majority and minority Members of the House, it was clear that a vote had to be called. The Speaker of Parliament, The Rt. Hon. Ebenezer Sekyi Hughes called for the vote after valiantly trying to call his House to order several times.

The majority from the NPP side attained 124 of the votes against 74 of the minority, who were mostly NDC members.

Parliament was recalled from recess to sit on Tuesday, August 12 following the House’s inability to conclude its consideration of the Ghana Telecom sale and purchase arrangement for UK-based Vodafone to acquire 70 percent of GT shares.

Ghana Telecom was a wing of the then Post & Telecommunications (P&T) Corporation that was established after World War II. Until then, P & T was a department of the Ghana Civil Service under the supervision of the Public Works Department (P.W.D).

On 20th February 1997, Ghana Telecom was officially privatized through the sale of 30 % shares to G-Com Ltd., a consortium led by Telecom Malaysia Berhard. The company was given an exclusivity period of five years which ended on 20th February 2002.

In February 2002, the Government of Ghana abrogated the Management Contract with G-Com Ltd., and subsequently assigned Telenor Management Partner (TMP) in July 2002 to develop a four year Business Plan for GT covering the period 2003 – 2007.

Following the acceptance of the Business Plan, the Government of Ghana entered into a Management Contract Agreement with TMP in February 2003 to implement the proposals in the Business Plan. TMP run the affairs Of Ghana Telecom until December 2006 when the government decided to end the relationship.

A six member team headed by a Chief Executive Office was appointed on December 6, 2006 to run the day to day operations of GT.

GT (then P&T) was incorporated in 1974. The enactment of the statutory corporation transformed what had been a Telecommunications Division into Ghana Telecom Company (a company limited by shares) with the Ghana Government being the majority shareholder.

The government in October 2006, announced its decision to privatize Ghana Telecom by divesting about 66.7 per cent of its shares in the company, to raise additional capital, and improve on the performance of the company.

Consequently, a transactional adviser was appointed in April 2007 to set the process in motion. When the bids were opened, a number of companies put in their bids, with three companies emerging out of the six that were short listed for the second round, but the government and the three companies were unable to reach satisfactory terms.

New negotiations later began with Vodafone, the world’s leading mobile telecommunications group and on July 3, 2008, the Government of Ghana announced the sale of 70% share to Vodafone. Yesterday’s vote in parliament has finally put the seal on the deal and it is now left for Vodafone to deliver on its promises.

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