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Vodafone deal restores vendor
confidence in GT – CEO
Accra, July 28, Ghanadot/GNA – Ahead of Parliamentary
decision on the sale of 70 per cent of Ghana Telecom (GT)
stake to Vodafone International Holdings BV, dealers such as
vendors, suppliers and creditors, have started going easy on
GT and rather “rushing” to deliver services to the company
on hearing of the possible Vodafone takeover.
Mr Dickson Oduro-Nyaning, Chief Executive Officer (CEO) of
GT told the Ghana News Agency (GNA) in an interview that
vendors, suppliers and creditors, to whom GT owes hundreds
of millions of dollars, have since the Vodafone deal went
public, gone slow on their rigid demands for debt repayment
and have rather moved in to help mitigate GT’s network
problems in anticipation of continued business relations
with Vodafone.
“Even the banks, which have for sometime now turned down our
requests for loans to clear goods at the ports and or to pay
for vendor services, are now running to us and offering
cheaper loans,” the GT boss said.
He noted that, that was a clear indication that the Vodafone
deal was a good one, which promises to make GT attractive to
creditors, vendors and suppliers and thereby move GT to the
top of the competition.
Mr Oduro-Nyaning said GT and its customers stand to benefit
from the confidence vendors, suppliers and the banks have
shown in the more experienced and financially stronger
Vodafone even before the deal was approved by Parliament.
Government is currently seeking Parliamentary approval for
70 per cent sale of what is now called the Enlarged GT
Group, including the GT fixed lines network, Onetouch
(Mobile network), Exzeed (the call centre), the National
Fibre-optic backbone and the Fibre-optic network of Volta
River Authority (Voltacom), to Vodafone at US$900 million.
In what seemed to be a justification for governments move to
strike that deal, GT’s own financial statement for 2007,
made available to the GNA, indicated that in the year ending
December 31, 2007, the capitalization of the company only
stood at 5,000 Ghana cedis (US$5,000), which represented the
amount government allocated to GT in 2008 as against an
estimated US$400 million plus debt.
But critics of the deal have raised questions about the
actual value of the assets being sold to Vodafone for a
“paltry” US$900 million. Indeed they have questioned why the
strategic investor only bought the assets of GT and left the
US$400 debt to be paid from the US$900 million.
Security concerns have also been played out in the debate
and some have called for wider public discussions of the
matter before a decision is finally taken.
Suggestions have also been made that shares should be
floated on the Ghana Stock Exchange (GSE) for citizens to
buy and own GT instead of selling majority shares to a
foreign company.
But Mr Oduro-Nyaning argued that floating shares on the
stock exchange at this stage when GT was almost in the red
did not make financial sense, saying that should shares be
floated, proceeds from the sale were supposed to go into the
consolidated fund since government owned 100 per cent of GT.
“It would not make financial sense to reinvest those
proceeds into GT because it would look like government
reinvesting its own money into GT and yet have to pay
dividends to citizens who bought shares at the end of every
financial year.
“This kind of move will only lead to more debt and those who
are making those suggestions are doing so out of ignorance,”
he said.
He said the other disadvantage in going to the stock
exchange was that in the event of GT going for loan or for
supplies and services on credit, it would be difficult to
provide a readily available guarantee since it usually takes
protracted Parliamentary approval to get a guarantee from
the state in such circumstance.
The GT boss said with the coming of Vodafone, GT’s creditors
would not even ask questions about the availability of a
guarantee when providing supplies and services on credit
because they have confidence in Vodafone.
“Moreover Vodafone is bringing additional US$500 million
capitalization, which is what GT needs most at this moment,”
the GT boss said.
On the issue of the real value of the 70 per cent shares,
Oduro-Nyaning questioned why critics were raising “hell”
over the figure at this time, saying that last year GT
advertised 66.7 per cent shares of GT for sale and no one
questioned that, even though that was also majority shares.
He said initially 17 companies excluding Vodafone, but
including Vodacom South Africa, a subsidiary of Vodafone
bided for the shares.
“Six of them were short-listed, comprising France Telecom,
Portugal Telecom, Etisalat of Dubai, Singapore Telecom,
Belgium Telecom and Vodacom South Africa,” he said.
Mr Oduro-Nyaning said out the six, three companies, France
Telecom, US$520 million, Portugal Telecom US$484 million and
Vodacom South Africa, US$355 were short listed but Vodafone
came in much later and offered US$900 million with an
additional US$500 million capitalization and that was
considered a better deal.
On the issued of the Voltacom fibre-optics facility,
Oduro-Nyaning indicated that more than 90 per cent of that
facility currently laid fallow as the Volta River Authority
had only set aside 10 per cent of it for its use.
“Even the 10 per cent they have set aside, they are using
only seven per cent of it, which is a negligible fraction of
the whole,” he said.
During the Ghana 2008 soccer tournament, government granted
permission for GT to use the VRA fibre-optic facility for a
test run GT on lease and pay an agreed 30 per cent of
monthly charges.
Mr Oduro-Nyaning noted that it was not as if the Voltacom
fibre-optics facility was in full use at VRA and had been
taken and added to the Vodafone deal, but it was already
being used by GT.
He noted that the critics who valued the assets of the
Enlarged GT Group in billion could only be doing an over
valuation of those assets, because what Vodafone offered was
not far from the actual value of all of the assets combined.
The GT boss said due to the current financial state, GT had
loads of equipment at the ports without funds to clear them
and as a result, there was a hold up in it roll-outs because
there was no adequate technical backup capacity to support
additional rollouts.
Staff of GT confirmed these sentiments to the GNA saying
that there was general frustration at GT, especially among
the technical staff due to lack of equipment to work with.
They added that there was also the non-payment of
Pensioners benefits for over year due to lack of funds.
Meanwhile, some of the most valuable internally trained
human resource personnel at GT, especially the technical
staff were leaving the company in their numbers to work with
GT’s current and future competitors.
“GT has about 1,000 technical staff out of 3000 employees
and most of them are being poached by our competitors. In
fact lots of them have placed job application at MTN, Tigo
and even the with the new comers like Zain and Globacom,”
the staff said.
The staff members expressed the hope that with the investor
capital, GT was poised to take its rightful place at the top
in the local telecom market and also become attractive to
quality staff and even subsequent shareholder.
They expressed confidence that like in the case of Safaricom
of Kenya, which became attractive after Vodafone had
invested into it, leading to over subscription of the Kenyan
government’s own floated shares, when GT became more
attractive, government could then float some of its 30
shares for citizens to buy into a more profitable and viable
GT.
GNA
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