Safaricom part owner caught up in Ghana controversy

A huge row is brewing in Ghana over the manner in which Vodafone of the UK acquired state telco, Ghana Telcom (GT), and its properties.

The UK telecoms operator, for years embroiled in controversy in Kenya over the shareholding in Safaricom by a shadowy player, Mobitelea, snapped up 70 per cent of the Accra firm despite being knocked out during the open bidding.

Last month Ghana appointed Emmanuel Ablorh, a member of the President’s Economic Advisory Team, to head a committee to reopen talks on the controversial acquisition.

The Vodafone bid was rejected by transaction advisers Ecobank Development Corporation, who, ironically, are the advisers of the current committee, on September 14, 2007.

However, in events that recall the involvement of the Kanu barons in the process of carving off Safaricom from Telkom Kenya, UK government pressure is widely suspected of having a bearing on the then president John Kufuor to open talks with failed bidder.

Resigned to

The then opposition National Democratic Congress (NDC) under the current president John Atta Mills promised to overhaul the deal but appears resigned to reviewing the arrangement.

Vodafone in its annual report last year revealed it had written off 250 million pounds invested in the Ghanaian firm terming it “impairment losses”.

Interestingly, the same book reveals it had acquired the last five per cent of Mobitelea holding in Vodafone Kenya, ending an embarrassing presence of the firm in Safaricom’s share register.

Subsequently Vodafone owns 40 per cent of Safaricom, the same as the government which took over Telkom shares during its sale to France Telecom and spun off 20 per cent during an IPO at the Nairobi Stock Exchange in mid 2008.

Mobitelea at one point indirectly owned 10 per cent of Safaricom. The Kenya deal attracted wide attention from Parliamentary watchdog committees but that appears to have been the end of the affair.

Telkom Kenya insiders of the time had scant knowledge of the matter as it was dealt with by a single former top official who has an on-and-off relationship with the beneficiaries.

The deal, sources familiar with the telecoms developments says, was approved by the Cabinet as there were no privatisation laws at the time.

But unlike in the case of Mobitelea whose Rift Valley principals made billions out of the deal — and are currently reportedly putting up huge real estate investments in upmarket Nairobi and abroad — in the Ghanaian case there have been no public allegations of payoffs for the ruling class.

The debt-laden West African parastatal was snapped up for $900 million but controversy persists especially after the national fibre optic network was thrown in as part of the deal. Voltacom, proponents of the deal, say it was bundled in because the deal was not attractive enough.

Apart from giving Vodafone Ghana’s third largest operator, it handed them the fixed line monopoly.

“Very few of the protagonists in this saga have bothered to even engage in a debate about whether based on these benchmarks, the GT-Vodafone deal was sub-optimal in light of international practice,” said analyst Frankline Cudjoe in remarks carried by Ghanaweb.com.

But that view is not universally shared as critics of the deal believe Vodafone short-changed the African country. The committee, in part, is supposed to look at this allegation.