Vodafone's African expansion blocked

James Middleton

July 21, 2008

2 Min Read
Vodafone's African expansion blocked

The Ghanaian government has blocked Vodafone’s £450m purchase of a controlling stake in the state-owned Ghana Telecom.

At the start of the month Vodafone, the world’s largest operator in terms of revenue, announced that it had effectively gazumped France Telecom by agreeing to acquire 70 per cent of the Ghanaian carrier with the government set to retain the remaining 30 per cent.

However, according to reports over the weekend the local government has intervened. The UK-based carrier will probably have to wait until October before moving forward on the deal as the Ghanaian parliament is just about to go into its summer recess.

The controversial deal had been criticised by members of Ghana’s main opposition party, the National Democratic Congress. Who believed Vodafone was getting its hands on the nation’s incumbent telecoms operator on the cheap.

The block might signal an opportunity for France Telecom to once again enter the fray potentially pushing up the sale price. “Other bidders are likely to offer higher bids than Vodafone and address the socio-economic needs of the country,” the NDC said in a statement.

Ghana has a population of 24 million, of which more than 50 per cent are under the age of 25. The country has a relatively low mobile penetration at around 35 per cent, and Ghana Telecom as the number three player own about 17 per cent of the market with 1.4 million customers. Not forgetting that the carrier is also the market leader for fixed line and broadband with 99 per cent of the total number of lines and 90 per cent of the retail ADSL market.

The acquisition looked like it might be a final feather in the cap for outgoing Vodafone chief Arun Sarin who steps down at the end of this month. “Ghana is one of the most attractive markets in Africa with mobile subscribers growing at more than 55 per cent p.a. and mobile penetration around 35 per cent. Our extensive operating experience together with our portfolio of products and services position us well to deliver a superior mobile experience to Ghanaian customers and significantly improve financial performance,” he said.

Sarin said that over the next five years Ghana Telecom is to invest over $500m in its operations and network, restoring and expanding network coverage and completing and integrating the fibre backbone, as well as introducing initiatives such as M-PESA and ultra-low cost handsets.

About the Author(s)

James Middleton

James Middleton is managing editor of telecoms.com | Follow him @telecomsjames

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