Vodacom denies upping Ghana bid

Johannesburg, 14 Jan 2008

South African mobile operator Vodacom denies it has submitted a new bid for a majority shareholding in Ghana Telecom (GT).

A report by the Ghanaian Chronicle says the government of Ghana has rejected all the bids it received for the sale of 51% shareholding in GT.

GT was to be privatised by the end of 2007. Short-listed bidders included Vodacom, Singapore Telecom and Portugal Telecom.

"It transpired that most of the potential investors had baulked at paying more than $500 million for the stake," the Ghanaian Chronicle reports.

The report also says Vodacom is reinforcing its bid and that the new offer would top $500 million.

Vodacom spokesman Dot Field would neither confirm nor deny Vodacom's bid was rejected, but said "we have not resubmitted a bid".

Too expensive

Vodacom CEO Alan Knott-Craig previously noted the company was not overly optimistic about its chances of winning the Ghana bid, as communications licences in Africa were becoming expensive. "We're not pinning our hopes on this type of expansion for our growth."

A financial analyst, who asked to remain anonymous, says $500 million for 51% of GT is still within a reasonable price range, especially in view of the value of subsidiary Onetouch. The analyst gave Onetouch a rough valuation of approximately $450 million.

He adds that Vodacom's presence in the country would make for an interesting competitive environment, in view of the fact that MTN and Zane already operate in the country.

Only the brave

BMI-TechKnowledge senior analyst Richard Hurst says only those who are brave stand a chance of making the GT privatisation deal work.

It should be noted this is not the first time GT has sought to privatise its operations, he says. Ten years ago, GT sold 30% of its shares to G-Com, a consortium led by Telecom Malaysia Berhard. G-Com was given an exclusivity period of five years which ended in February 2002.

The government of Ghana then abrogated the management contract with G-Com and subsequently assigned Telenor Management Partner in July 2002 to develop a business plan for GT covering the period 2003 to 2007.

"The legal wrangling and dust surrounding the Telecom Malaysia Berhard deal is only recently settling. Also, the termination of the management contract with Telenor should serve to indicate the transaction will favour the brave," says Hurst.

Still, the Ghanaian telecoms market holds great potential, as it has a population of around 21 million and a mobile subscriber base of six million, he says. "There remain growth opportunities in this sector."