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Business News of Monday, 6 January 2003

Source: BBC Online

Telekom Malaysia Sues Ghana

The authorities in Ghana are locked in a bitter dispute with Telekom Malaysia (TM), which promised to modernise and improve the African country's crumbling telephone network.

Telekom Malaysia poured millions of dollars into Ghana Telecom after it was privatised and tripled the number of Ghana's telephone lines.

But a currency devaluation and a change of government in Ghana means that TM is now facing losses of $100m (?62m).

The end result is that TM has sued the Ghanaian government, with the case now awaiting international arbitration.

Changing politics

TM paid $38m for a 30% stake in Ghana Telecom when it was privatised in 1997.

As part of the deal, TM was awarded the management of the company and promised to install 40,000 landlines by 2002.

At the beginning of 2000, TM then paid up half of a pledged $100m to purchase a further 15% stake in the African company.

But that same year, TM's management of Ghana Telecom became a thorny issue in the election.

And, when president John Kufuor came to power, he showed a new hostility to TM.

TM is now demanding back its latest investment, and insists there is still hope of reaching an amicable agreement.

Rising losses

TM also lost out because of a steep devaluation in the Ghanaian cedi in the late 1990s.

The Malaysian firm was forced to buy expensive telecoms equipment in US dollars, but reaped its revenues in cedis.

2000 was also the year of a wider telecoms crash, squeezing TM's finances further still.