Thursday, July 10, 2008

Mid-Week Madness:Why did NPP Government Have to Sell Ghana Telecom?

The 70% acquisition by Vodafone of state-owned Ghana Telecom may be a done-and-dusted deal, subject only now to parliamentary approval in the august house. There are, however, serious issues arising that merit some consideration.

First of all, one would have to be from Mars not to know that this is an election year. After the announcement was made in 2006 to privatise, why is it only now that the putative sale has gone through, some five months before general elections? Secondly, despite the fact that there was a breather after France Telecom and Portugal Telecom were rejected some months back, at what point did Vodafone up and decide to make the bid, which, if we believe the opposition, was a non-starter, on account of the fact that there were other bidders ready to pay more than the $960million?

In December 2007, Kenya, where Vodafone operates as a mobile operator under Vodafone Kenya, was in the concluding stages of privatising state-owned Telkom Kenya, with the winning bidders France Telecom taking control by 21 December, 2007. The uncanny similarity of an opaque bidding process coupled with a privatisation so close to general elections makes for an explosive coincidence that is so serious it’s not funny. One might be tempted to think that this has nothing to do with Vodafone, till we read that an offshore-registered company by the name of Mobitelea was offered an opportunity to acquire 25% of Vodaphone Kenya Limited at the same price Vodafone had acquired them. This prompted civil society groups in Kenya to argue that “the privatisation of Telkom Kenya cannot…be deemed regular until the true picture of its ceding of [mobile provider] Safaricom shares to Vodafone Kenya is unravelled and rectified.”

Here, there is little proof that anything irregular has gone on despite the manner in which the sale went through so quickly, but reading the *Financial Times* account of the sale was sufficient to prompt speculation that given that the country is experiencing a budget deficit, the government might have seen a sale so close to the election as an opportunity to make amends around the economy.

Practices elsewhere
Still, whilst Kenya can talk about Vodafone Kenya bidding for a part of Safaricom, Ghana cannot even talk about a Ghanaian consortium ready to buy GT. This is one of the unique things about this privatisation. The online encyclopaedia Wikipedia tells us that Vodafone has three networks in the Middle East and Africa that are majority-owned: Egypt, Qatar and now Ghana. In the first case, state-owned Telecom Egypt owns 45% of Vodafone Egypt. In the Qatari case, Vodafone went in as a mobile operator, securing a 45% stake in Qatar Telecom, the Middle Eastern country’s second mobile licence provider. When we come to Ghana, a significant 70% was not only at stake, but also of our state-owned provider, prompting one to wonder why such a high figure, and why the land-line provider? Reports in the Ghanaian media indicate that Globacom had also made a bid, but had to settle for second best through a mobile service.

Questions Unanswered
Those are not the only questions. Reports in the media suggest that the minority’s concern was that Vodafone comes in as a strategic investor with little experience in landline provision. That it is setting up new services in New Zealand, where Vodafone also operates, that look like landlines and mobile lines combined should not be sufficient to assuage our fears of how it will manage our broadband services, national fibre optic system, and others. What of our national security? There is anecdotal evidence of our state security – BNI -- monitoring landlines; how far will the security services go in allowing a mobile provider with plenty of capital to share the monitoring of our landlines? Thirdly, all mobile providers have had to pass through GT for their operations. Now that Vodafone’s acquisition is semi-complete, will Vodafone’s supreme interest be in the regulation of the other providers, or a rough-and-ready competitor alongside them? Will the lines be indefinitely blurred on all these issues?
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