Identifier
Created
Classification
Origin
08ACCRA1076
2008-08-21 08:31:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Accra
Cable title:  

Parliament Approves Vodafone Acquisition

Tags:  ECON EFIN EINV GH 
pdf how-to read a cable
VZCZCXRO5445
RR RUEHMA RUEHPA
DE RUEHAR #1076 2340831
ZNR UUUUU ZZH
R 210831Z AUG 08
FM AMEMBASSY ACCRA
TO RUEHC/SECSTATE WASHDC 6897
RUEHZK/ECOWAS COLLECTIVE
UNCLAS ACCRA 001076 

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ECON EFIN EINV GH
SUBJECT: Parliament Approves Vodafone Acquisition
of Ghana Telecom after Spirited Debate

Ref: Accra 904

UNCLAS ACCRA 001076

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ECON EFIN EINV GH
SUBJECT: Parliament Approves Vodafone Acquisition
of Ghana Telecom after Spirited Debate

Ref: Accra 904


1. (U) Summary: GhanaQs parliament on August 14, 2008
approved by a majority vote the $900 million sale and
purchase agreement between the Government of Ghana and
Vodafone International Holdings B.V. for the acquisition
of 70 percent shares of Ghana Telecommunications Company.
The debate before the vote was largely along partisan
lines. Reactions from the public after the approval were
mixed as some sections of the public oppose the sale of
the shares, others think the sale value is not enough,
and those who support the deal think is the best for
Ghana.
End Summary.


2. (U) On July 3, Vodafone announced that it had agreed
to buy 70 percent of Ghana Telecom (GT) at USD 900
million but the acquisition was subject to approval by
GhanaQs parliament. Parliament, however, failed to
ratify the deal before going on recess on July 18, 2008
because an amended version of the agreement which was re-
laid was done too late for the house to consider. For
the USD 900 million, Vodafone will get an QEnlarged GT
GroupQ, which is the GT Group together with FibreCo.
FibreCo is the National Communications Backbone Company
Ltd., which owns all the fiber optic network and assets
of Voltacom and assets of a new fiber optic network being
laid with a Chinese EX-IM loan. Vodafone is acquiring
the shares on a debt-free, cash-free basis. After
netting the cash and debt of GT, which is estimated to be
USD 400 million, the net cash GoG expects is about USD
500 million. The GoG is still expected to complete the
ongoing fiber optic network from Kumasi to Sunyani.


3. (U) As expected, parliament was recalled from recess
on August 12, 2008 to ratify the agreement. The house
was sharply divided over the sale, with the ruling New
Patriotic Party members explaining the Vodafone deal was
the best for the nation, while the minority National
Democratic Congress members calling the sale price a
pittance. The minority leader in parliament described
the deal as "buy-one-get-five-free." According to him,
South Africa Telecom had made an offer of $947 million
for Ghana Telecom minus the fibre optic cable network
which has been added to the Vodafone deal. The NPP,
however, said the SA Telecom offer came in too late and
the payment was going to be spread over a longer period.
The minority also argued that the entire process was not
transparent because government failed to invite other
bidders when it increased GT's assets significantly.
While the majority side explained some of the terms and
conditions in the agreement, considerable time during the
debate was spent on what they saw wrong with the sale of
30 percent of GT to Telekom Malaysia in 1997 by the NDC
when it was the ruling party (the sale was later reversed
under the NPP at considerable cost to Ghana Telecom).


4. (U) The Convention Peoples Party, a smaller minority
party, and other pressure groups outside the house have
opposed sale of the shares of GT, arguing that the
national asset must be salvaged and protected from any
foreign interest. A group also filed a suit in court to
prevent the sale. One pressure group, the Committee for
Joint Action, with the NDC presidential candidate John
Atta Mills participating, picketed outside parliament
urging members not to support the agreement. Some
workers of GT have also demonstrated in support of the
agreement.


5. (U) As expected, voting was largely along party lines.
The majority won the vote, 124 to 76. Although, the
majority was elated, public reaction to the deal was
mixed. Reactions still reflect the positions of the
three groups.


6. (SBU) Comment. Minister of State of Finance Dr.
Anthony Akoto Osei was pleased and relieved. The
expected proceeds from the GT sale have been included in
the GoG budget for the last two years and the revenue is
sorely needed as the fiscal deficit rises. The GoG also
badly needs foreign exchange inflow to shore up the
Ghanaian currency which has, over the last four months,
depreciated at a faster rate than in the last six years.
Dr. Osei expects the deal to be concluded in a month.
Vodafone expects to begin work soon and will make its
presence felt in the last quarter of the year. Analysts
expect some exciting times for mobile phone service users
in Ghana with the entrance of Vodafone, Zain/Celtel, and
Globacom into the Ghanaian industry. End comment.

Brown