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Vodafone’s strength
as an African telecom and strong global presence was the
seller - Communications Minister
Accra, July 29, Ghanadot/GNA - Dr Benjamin Aggrey Ntim,
Minister for Communications on Tuesday said the proposed
sale of 70 per cent Government shares in the Ghana
Telecommunications Company (GT) will make the company
viable.
He told a press conference in Accra that for the last 10
years, there had not been any profit from the Company.
Dr Ntim said by May 2008, total assets of GT were GHc552
million against total liabilities of GHc586 million
resulting in a negative self worth figure of GHc34 million.
Furthermore, the negative working capital of GHc188 million
recorded in May 2007 had risen to 199 million in May 2008.
“This situation is rapidly leading to GT’s insolvency and a
total collapse if no immediate action is taken,” he said.
He said the present deal to offload 70 per cent shares in
for $900 million in the company to the UK based Vodafone
International Holdings BV, is to inject private sector
capital into GT, preserve it and ensure that it grows to
restore its leadership role in the competitive marketplace.
“Given the current competitive market forces at play in the
country, the negative balance sheet status of GT, it is
unlikely to see GT remain competitive over any appreciable
length of time before the factors that give premium to its
consideration to its value may be eroded”, Dr Ntim said.
He said GT would be listed on the Ghana Stock Exchange in
2010, and that its present financial insolvency did not
qualify it to be listed on the Exchange.
The Ghana Trades Union of TUC, the Christian Council and the
Minority in Parliament have criticised the proposed sale
with some of them scepticism about its expediency.
A debate in Parliament, to ratify the proposed deal on July
18 was inconclusive before the House rose for recess.
However, the House is expected to be called back on 12
August 2008, to consider the sale and purchase agreement.
Recalling some of the causes that led to GT’s financial
challenges, Dr Ntim said despite the payment of 38 million
dollars by Telekom Malaysia to acquire a 30 per cent share
in GT in 1997, it failed to pay any dividends for the entire
five-year period it served as “strategic investors”.
He said Telecom Malaysia also failed to meet set targets
under the GT Business Plan and therefore when the contract
expired in 2002, Government of Ghana did not find it
expedient to renew the contract.
Also, after the expiration of a three-year management deal
with Telenor Norway which partnered GT Management after the
Malaysians, the contract was not renewed because of a
dispute on share value between the Government of Ghana and
Telekom Malaysia.
Dr Ntim debunked allegations that Government was not
transparent with the transactions leading to the Vodafone
agreement.
He said the bid was advertised in July 2007 both locally and
internationally to invite strategic investors to submit
their expression of interest in the GT, for which 17
companies, including Vodafone responded.
“It must be noted that Vodafone was short-listed because the
evaluation of the Company’s profile revealed that Vodafone
owned 50 per cent of Vodafone South Africa shares. This was
considered advantageous as Vodafone was in a better position
to bring to GT the global presence of Vodafone, in addition
to Vodafone’s strength as an African telecom market player,”
Dr Ntim said.
Reacting to criticism against the inclusion of a national
fibre-optic backbone in the sale, Dr Aggrey-Ntim said the
Ministry of Communications had met all the telecom operators
in Ghana and offered them the opportunity to submit
proposals for the management of the infrastructure to the
benefit of all industry players on an open access model.
Dr Ntim noted that that the insolvency problems of the GT
emanated from its underperformance against revenue
expectation, and its inability to face adequately its
competitors in terms of mobile telephony service because of
inadequate investment.
He also announced that Government had guaranteed an amount
of $40 million to cater for worker separation arrangements.
He pointed out that from the financial position, it was
necessary to take action to save the about 4,200 workers of
GT from redundancy, and the proposed sale was in the
interest of workers.
GNA
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