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