GOG BUYS WESTEL TO END SEVEN-YEAR-OLD DISPUTE

C O N F I D E N T I A L ACCRA 001868 SIPDIS DEPARTMENT PLEASE PAS COMMERCE FOR MARIA RIVERO TREASURY FOR LUKAS KOHLER USTR FOR LAURIE-ANN AGAMA MILLENNIUM CHALLENGE CORP. FOR ROD NORMAN E.O. 12958: DECL: 09/14/2015 TAGS: GH ECON KMCA ECPS EINV SUBJECT: GOG BUYS WESTEL TO END SEVEN-YEAR-OLD DISPUTE REF: ACCRA 1389 Classified By: EconChief Chris Landberg for reasons 1.5 (b and d) ¶1. (SBU) Summary: Western Wireless International (WWI),the primary shareholder in Ghana's embattled second national operator Westel, has sold its interest in the company to the parastatel Ghana National Petroleum Company (GNPC) for USD 10 million. WWI dropped its international arbitration case against the GoG as a result of the sale, thus ending the seven-year-old dispute. The future of Westel, however, is unclear, as the GoG must now decide whether to sell to a private investor or run the company itself. End Summary. The Deal -------------- ¶2. (SBU) Westel Managing Director Bill Taylor (protect) told Econoffs September 13 that WWI received USD 10 million from the parastatel GNPC on September 12, thus completing the sale of WWI's entire 70 percent stake in Westel to the GoG (reftel). The GoG-- through the GNPC --is now the sole owner of Westel. The GNPC has named Ghanaian attorney and television commentator Ursula Owusu as interim Managing Director. Taylor will depart Ghana after a one- to two-week handover period. His departure will signify the end of WWI's involvement in Ghana's telecom market. WWI dropped its international arbitration case against the GoG as a result of the sale. Westel's Future -------------- ¶3. (C) Taylor said the GoG must move quickly if they intend to sell Westel without diminishing its value. The company's finances will only allow for 60 to 90 days of operation before additional cash will be needed. Taylor said GNPC Managing Director Stephen Abankwa claimed his mission was to maintain Westel's value until an investor could be found, but hinted that GNPC could opt to maintain ownership of Westel and contract out the management of the company. (NOTE: the parastatel Ghana Telecom (GT) is run under a similar arrangement. END NOTE.) Minister of Communication Albert Kan-Dapaah, however, assured Taylor that an investor would be found as soon as possible, adding that GNPC would not be allowed to control the company. Comment -------------- ¶5. (C) Comment: Although the GoG's purchase of Westel has ended the seven-year-old dispute, it was not WWI's preferred outcome, and probably not the best result for Ghana's consumers. Had GNPC not exercised its right of first refusal, WWI claims it could have sold Westel for the same price to MTN of South Africa in June, and that by now MTN would have given the company the resources it needed to compete with GT and expand its operations. Instead, the result is that the GoG now owns both of Ghana's fixed line operators. Nevertheless, this was a mutually acceptable resolution of a dispute that tainted investors' perceptions of Ghana and complicated US-Ghana relations. End Comment. LANIER