Telekom Malaysia to sell its 30% stake in Ghana Telecom

Telekom Malaysia Bhd is planning to dispose of its 30 per cent stake in Ghana Telecom following the Ghana government's decision to sell its 70 per cent stake in the latter.

Sources said Telekom plans to sell off its stake "if the price is right". It is believed that the new Ghana government has lined up a few parties for discussions to take over Telekom's stake.

On Feb 21, the new Ghana government had decided not to renew the current management deal with Telekom as part of its plan to open its fixed telephone lines sector to more competition.

A Reuters report on Jan 30 said American and European telecommunications (telcos) led by giant AT&T had expressed their interest in acquiring stakes in the African company.

Telekom officials confirmed that the company has no plans to increase its stake in Ghana Telecom, despite having the first right of refusal for the remaining 70 per cent.

Telekom had also announced on Feb 22 that it has decided not to purchase an additional 15 per cent stake in Ghana Telecom, despite having paid a US$50 million (RM190 million) deposit. It is learnt that the deposit may be converted into a loan for Ghana Telecom.

Telekom bought the 30 per cent for RM144.4 million (US$38 million) in 1996 via its 85 per cent-owned unit G-Com Ltd. Despite political controversy in Ghana relating to the acquisition, the company is believed to be "profitable".

Analysts said the Ghana operations are contributing about RM57 million in earnings a year.

According to African newspapers, Ghana Telecom had to pay about RM239.4 million in fines over the past five years to the National Communications Authority for "failing to meet Ghana's quality of service requirement set in the agreement".

Ghana Telecom is the dominant telco in the country's fixed line duopoly. The liberalisation of the fixed lines sector may lead to price pressures in a market of 300,000 users. It operates about 235,000 lines compared with its only competitor Westel Telesystem's 5,000 lines.

The disposal could mark Telekom's third exit from its major investments overseas. Telekom withdrew from India and Thailand last year due to the nature of the competitive markets in those countries.

On the domestic front, Telekom has admitted eyeing Malaysia's largest cellular operator Celcom (M) Sdn Bhd.

Talk had been rife that Telekom plans to use proceeds from the sale of its overseas assets to finance local acquisitions as the government pushes for an industry consolidation.