GT sale is to correct financial throes - Minister

Accra, July 29, GNA - Dr Benjamin Aggrey Ntim, Minister for Communications on Tuesday said the proposed sale of 70 per cent Government shares in the Ghana Telecommunications Company (GT) will make the company viable.

He told press a conference in Accra that for the last 10 years, there had not been any profit from the Company.

Dr Ntim said by May 2008, total assets of GT were GHc552 million against total liabilities of GHc586 million resulting in a negative self worth figure of GHc34 million.

Furthermore, the negative working capital of GHc188 million recorded in May 2007 had risen to 199 million in May 2008.

"This situation is rapidly leading to GT's insolvency and a total collapse if no immediate action is taken," he said.

He said the present deal to offload 70 per cent shares in for $900 million in the company to the UK based Vodafone International Holdings BV, is to inject private sector capital into GT, preserve it and ensure that it grows to restore its leadership role in the competitive marketplace.

"Given the current competitive market forces at play in the country, the negative balance sheet status of GT, it is unlikely to see GT remain competitive over any appreciable length of time before the factors that give premium to its consideration to its value may be eroded", Dr Ntim said.

He said GT would be listed on the Ghana Stock Exchange in 2010, and that its present financial insolvency did not qualify it to be listed on the Exchange.

The Ghana Trades Union of TUC, the Christian Council and the Minority in Parliament have criticised the proposed sale with some of them scepticism about its expediency.

A debate in Parliament, to ratify the proposed deal on July 18 was inconclusive before the House rose for recess.

However, the House is expected to be called back on 12 August 2008, to consider the sale and purchase agreement.

Recalling some of the causes that led to GT's financial challenges, Dr Ntim said despite the payment of 38 million dollars by Telekom Malaysia to acquire a 30 per cent share in GT in 1997, it failed to pay any dividends for the entire five-year period it served as "strategic investors".

He said Telecom Malaysia also failed to meet set targets under the GT Business Plan and therefore when the contract expired in 2002, Government of Ghana did not find it expedient to renew the contract.

Also, after the expiration of a three-year management deal with Telenor Norway which partnered GT Management after the Malaysians, the contract was not renewed because of a dispute on share value between the Government of Ghana and Telekom Malaysia.

Dr Ntim debunked allegations that Government was not transparent with the transactions leading to the Vodafone agreement.

He said the bid was advertised in July 2007 both locally and internationally to invite strategic investors to submit their expression of interest in the GT, for which 17 companies, including Vodafone responded.

"It must be noted that Vodafone was short-listed because the evaluation of the Company's profile revealed that Vodafone owned 50 per cent of Vodafone South Africa shares. This was considered advantageous as Vodafone was in a better position to bring to GT the global presence of Vodafone, in addition to Vodafone's strength as an African telecom market player," Dr Ntim said.

Reacting to criticism against the inclusion of a national fibre-optic backbone in the sale, Dr Aggrey-Ntim said the Ministry of Communications had met all the telecom operators in Ghana and offered them the opportunity to submit proposals for the management of the infrastructure to the benefit of all industry players on an open access model.

Dr Ntim noted that that the insolvency problems of the GT emanated from its underperformance against revenue expectation, and its inability to face adequately its competitors in terms of mobile telephony service because of inadequate investment.

He also announced that Government had guaranteed an amount of $40 million to cater for worker separation arrangements. He pointed out that from the financial position, it was necessary to take action to save the about 4,200 workers of GT from redundancy, and the proposed sale was in the interest of workers.