Kojo Oppong Nkrumah: Selling Ghana Telecom – Selling our eggs

I heard of this sale of GT about three months ago when a source at the finance ministry hinted me that government was gradually finding itself in a tough spot and might resort to some “interesting” measures to salvage its economic fortunes.

At that time, cabinet was just considering the effects of the rising crude and food prices on the world market. My source suggested that GT was on its way to being sold because government had to quickly raise large foreign exchange to sustain the economy, and take its hands off a troublesome child.

I must admit, I thought it would never happen. For a sitting government to risk such a decision in an election year……………..I really thought it wouldn't happen. But the first week of July changed any such nationalistic dreams I had. Government announced it was expecting some 900 million dollars injected into the economy from the sale of GT.

The Facts

• Government of Ghana has already signed an agreement with Vodafone International BV, a subsidiary of Vodafone UK, to sell 70% of GT for 900 million dollars to vodafone.
• Government of Ghana would prior to the sale, advance a shareholder loan of 228 million dollars to Vodafone.

• Government of Ghana would also pay off GT's 400 million dollar debt hanging over its head and also make available 40 million dollars for the payment of severance pay to workers who would be laid off after a restructuring by Vodafone.

• Government of Ghana EXPECTS that Vodafone would inject an investment of 500 million dollars into the newly acquired company to improve its operations.

• Included in the sale of GT are Ghana's fibre optic backbone (which in the future would serve as the platform / infrastructure for improving ICT products and services) and the Ghana Telecom University in Tesano, Accra.

From the onset, many market watchers and critics complained that the deal was not wholly transparent. They argued that Government had not fully disclosed all its reasons and preferences to the market and consequently had ended up with a bad deal.

Since the debate started, many have focused on the deal itself and the many parts of it that have been described as outrageous. – like selling the fibre optic backbone for 999yrs, and paying all the debts while Vodafone gets all the benefits etc.

For me however, my worry is about the whole idea of Selling 70% of the state Telecommunication provider to the Brits.

Why are we Selling GT?

I asked the communication's minister on the 15th of July on my show.

His response – “ GT needs heavy financial investment and better management.” He later admitted that as the minister Osei Akoto (finance ministry) had said, Ghana also needs heavy injection of foreign exchange. (Remember crude oil has exceeded in the 1st 6mths, double of our budget for oil importation for the whole year. – We need money)

But is selling GT the only way to raise that needed investment and get the required management expertise?

Certainly not!!!!!!

In every nation's life, there are some strategic areas that MUST be protected by the state. – Water , Energy, Telecommunications, Roads just to mention a few.

Where a state opts for a capitalist / free market approach (Of which I am a major advocate), the state often sets the standards by having a state owned player that provides the basic standard and charges the basic cost while remaining profitable.

In the UK BT is the standard for telecommunication services. Basic services at Basic cost.

This then subtly determines what competition can and cannot do. The regulator like the NCA, can only enforce legal standards. Legal standards are not the same as market standards.

So often there is the need to have a state owned player set the market standards. British Airways does the same for the aviation industry in the UK.

Who then told us that a state owned Telecommunications Company is an evil idea? Who told us that granted that we have failed in managing our own affairs; we have to give away ownership just so we get better management?

It's a basic management fact that ownership and management are two different items. Owners don't need to manage. If I own a taxi and don't think I can be a good taxi driver, I may just want to hire a professional driver to provide me with the expertise. So granted that we are even poor in managing our own GT, we do not need to sell our ownership just to get better management.

If you know the value of an asset and its potential – you hire managers.

So why don't we just hire better managers?
In agreeing to a clause in the contract to pay for the severance of some staff, the government tacitly admits that there are people at GT who shouldn't be there. Fire them then.

A source at the communications ministry tells me there is also so much corruption and inefficiency in the management of GT thus government's quick desire to wash its hands off the troubling state asset.

Again I disagree – Sack the inefficient ones, prosecute the corrupt ones, show zero tolerance for underperformance but for Christ sake please don't sell our birthright.

Is anyone saying that if we need 500 million dollars, we cannot raise it from a consortium of banks in Ghana or even by floating it on the Ghana stock exchange?

Is anyone saying that if we want to hire expertise to better manage GT, we can neither find it in Ghana nor hire even Vodafone to come provide that expertise? After all MTN and Tigo has over 80% of their management staff as Ghanaians.

And if it is about government interference in taking economically unwise decisions, the simple way out is to empower GT to be able to say no to government interference.

I believe that GT can play a strategic role in the Telecommunications industry in Ghana if better managed with less Political influence. Let's clear the GT board off the many Political appointees and get proven management hands to sit on the board.

Let's sack those who need to be sacked and overhaul the place. Let's demand that they do better. But certainly let's not give away 70% of our ownership.

Finally, I've also heard some say that Vodafone and their likes would not give you expertise even if you pay for it without giving them equity. True. That happens in management contracts sometime. But in such cases, we give such management partners minority equity. Let's them have 30 instead and let's keep the 70. And let's call on Ghanaians to raise the money needed for the investment.

Fibre Optics – The Future of Telecoms

Finally, a simple check in the industry shows the immense potential of fibre optics for the telecoms industry. It is actually the future for internet, voice and data communication.

Why then do we sell it all out to GT when in the case of VRA we said it wasn't wise to give one player, the entire transmission infrastructure?

Selling the Fibre optic backbone is like selling our eggs.

The deputy minister of communications –Opare Ansah argues that the Sale of the Fibre Optic backbone doesn't amount to the creation of a monopoly for GT.

He explains that all other future players who require fibre optic infrastructure for the furtherance of their business only need to build their own or hire from GT!!!!!!!

That honourable minister is the working definition of a monopoly on today's market.

It's just like saying let's give the power transmission lines back to VRA…and for any energy company that comes to town “ you can either build your own transmission lines or rent some transmission space on the lines from VRA”

I will not even bother to argue out the price being too low and the fact that we do not need to add the Ghana Telecom University.

I will not even bother to raise the Political argument of believing in Ghana as Dr. Nii Moi Thompson has been referring to in all of this debate.

I will not even bother to express my discomfort about the ever too frequent attempt to rush through such contentious issues in Parliament on the last days of its last sitting.

In conclusion, I suggest that unless there is another reason to sell GT of which we haven't been told, then we can simply find the investment (Like we did for Valco) and hire the expertise.

Let's not sell our eggs…..

These are my thoughts……….tell me yours