West Africa--the New Telecom's Frontier?

West Africa--the New Telecom's Frontier?

By E.K.Bensah II 

From Ghana Telecom to Nigeria Telecom, the privatization bandwagon is on course in the ECOWAS region. If you recall that last week we touched on the West African neighbour of Mali's landline set for privatization by the end of the year, you might also remember that NiTel was broached. Although incoming Globacom made some noises a few weeks ago supporting GT's divestiture, the country itself has kept rather mute on what lessons the GT/Vodafone debate might hold for the regional giant. 

It has always often been said that if Ghana is the gateway to West Africa, Nigeria is the destination. This much was confirmed when a couple of editions ago, we broached the issue of Stanbic Bank's acquisition of a Nigerian bank after having missed the Ghanaian one - Agricultural Development Bank --by a whisker. In the telco industry, the situation is not that much different. The exception in the drama that has unfolded over GT is that Vodafone has itself kept mute over its potential acquisition of NiTel. There has been little in the press to suggest that it remains interested in NiTel.  

Nonetheless, the Nigerian parliamentarians are unperturbed and have set the pace - unlike in Ghana - on ensuring some degree of accountability. 

Judging from the Nigerian press at least, the debate has been non-existent to the fever-pitch degree here in Ghana. Instead, the lawmakers, accepting a major contention of NiTel having failed, have sought to find out why. To this end, the Senate Committee on Communications is to probe the roles played by concerned stakeholders in the fall of NiTel. 

Nigeria's Vanguard newspaper reports that some of those that contributed to the downfall of NiTel virtually defrauded the company of billions of naira in dues. Chairman of the committee Senator Sylvester Anyanwu at a press briefing alleged that the private operators were using as much as 75% of the capacity and infrastructure of NiTel for free, with some of them "enjoying a two-year rides in the company". 

Concrete steps have been taken to hold such people accountable, including a letter to the President of the Republic Umara Yar'Adua asking him to turn down the appointment of BNP Paribas as consultants and advisers in their repeated attempts at selling NiTel. Secondly, the Committee has managed to trace the origin of NiTel's downturn to 2003 when a putative Dutch company-Pentascope--managed it [does Telenor in GT come to mind?] turning NiTels "profit profile into a loss despite the inflow of a N40 billion unsolicited loan for the company." Third, unlike the lack of accountability surrounding Ghana's National Communications Authority (NCA), the Committee has asked the latter's Nigerian counterpart--better known as the Nigerian Communications Commission(NCC)--to "get off the fence and take a position in this ongoing debate and investigation  of the irregularities in NiTel." Finally, the Chairman of the Committee listed MTN Nigeria; Starcomms, Globacom; Shell; Ericsson; First Bank; Nigeria Liquefied Natural Gas among many others who have failed to give account of their financial obligations to Nitel. This is no different in Ghana, where many companies owed GT millions, but was never broached in the contemplation of the sale to Vodafone. 

In order to ensure that there is significant movement, the committee has asked the security agencies "to ensure that current and former staff of companies which played a role in the past botched privatization of NiTel were made to account for their deeds." These include the Bureau of Public Enterprises(BPE), which has claimed to have played no role in the whole affair--despite the fact that, as the paper avers, "former staff of the BPE…played inglorious roles in the …sale of NiTel". Unlike in Ghana where the NCA issued a fine and left no room for enforcing the fine, Nigeria has gone a different way. Failure to respond to the above queries, the paper continues, will force the Committee to invoke its powers under certain sections of the Constitution to ensure that they comply.

Vivian Reding's Unwitting Push of Vodafone to Africa?

Like a bad smell, the ramifications of the acquisition by Britain-based Vodafone will not go away. Although most Ghanaians seem to be tight-lipped now about the sale, especially because they have been put before a fait accompli, elsewhere, the news is not so bright for Vodafone. 

Forget the fact that Vodafone is in court in India over tax issues at the moment. Let's just troop down to the UK itself for a while. According to Mobile News, the UK and Spain used to be Vodafone's "cash cow". Now, the revenues in those markets are not so hot. This is the reason why it's been necessary for Vodafone to expand into Eastern European and African markets. The article reports that in its own home market of the UK, it has "shed customers." With its churn up, "its voice revenues were down."  

On top of it all, the so-called combative European Commissioner for Information Society Vivian Reding - characteristically hot on the heels of creating opportunities for consumers - has managed to sideline a number of the mobile phone operators with her campaign on termination rates and the cutting of roaming charges that have normally been rather prohibitive. Companies like Vodafone have seen the future as not being bright, and jumped the pond to escape the wrath of Reding. As a consequence, 140,000 customers have been added to the Vodafone giant in Eastern Europe, Asia and Africa.  

The coming of Vodafone to these markets have however coincided with phenomenal developments in the mobile phone, or telco industry--and no where has this been more significant than in West Africa. 

Mali's Privatisation Process Unclear

It is a fact that come the end of 2008, Mali's landline SOTELMA will be privatized. Apart from the fact that we now know that BNP Paribas is a consultant/transaction adviser for the process--much like in the NiTel process above--little else is indicated in the press about the state of play. It appears that although the francophone press has touched on it, the Anglophone press probably could not care less! 

Burkina Faso's Landline Goes for IPO

Meanwhile, also in West Africa, the small ECOWAS country is pursuing an Initial Public Offer(IPO) for a (private) 20% stake in its state-owned ONATEL. The francophone online paper lesafriques.com reports that the state will retain 23%, whilst personnel will get 6%. It's unclear what happens to the remaining 51%! 

Regulating Guinean Telcos, Re-Nationalising Soltelgui

The small ECOWAS country will be getting its equivalent of Ghana's NCA in a regulatory authority that has yet to be named. Tibou Kamara, the Guinean Minister of Communication and New Technologies, has indicated that the month of August will see the country's first regulatory body. It is interesting to read that the Minister believes that a lack of a regulatory regime and a body that can play its rightful role is a "handicap" in the "normalization of services rendered by operators." He says that it is not a witch-hunt, but an opportunity to ensure that all actors [in the industry] have a level playing field. 

In the meantime, the country has the distinction of being the first out of Mali, Nigeria; Ghana; and Nigeria listed here to have 60% of its shares sold back to it by Telekom Malaysia by the end of September 2008 in a Settlement and Transfer agreement (STA). TeleGeography maintains that Soltelgui--Guinea's state-owned company--was established in 1993, only to be privatized in the same year that Ghana Telecom was born--1995, when Telekom Malaysia purchased 60% of a stake for $US45million. After a decade of ownership, it seems the Malasyian telco has had enough and is up and leaving "as part of a broader review of its international investment strategy to

focus on geographic regions closer to home. Could the same happen some day in Ghana? 

Ends