Vodafone UK in controversial Kenya, Ghana telecom deals

Vodafone UK, seems to have a questionable reputation in its dealings on the African continent.

Not only is it embroiled in a controversial deal in Ghana when it bought the majority stake in Ghana Telecom (GT), the national telecom provider, Vodafone has been stuck in an equally questionable controversy in Kenya over the shareholding in the biggest mobile phone company in that country – Safaricom which the Nation, a Kenyan publication says involves a “shadowy player” Mobitelea.

Vodafone owns 40 per cent of Safaricom, the same as the government which took over Telkom shares during its sale to France Telecom and spun off 20 per cent during an IPO at the Nairobi Stock Exchange in mid 2008, the publication said, adding that, Mobitelea at one point indirectly owned 10% of Safaricom. The Kenya deal attracted wide attention from Parliamentary watchdog committees but that appears to have been the end of the affair, it said.

The publication indicated that in the case of Mobitelea whose Rift Valley principals made billions out of the deal — and are currently reportedly putting up huge real estate investments in upmarket Nairobi and abroad — in the Ghanaian case there have been no public allegations of payoffs for the ruling class.

Ghana’s parliament ratified the sale agreement for GT despite calls against the sale by some pressure groups and individuals.

Vodafone UK bought a 70% stake in Ghana Telecom in 2007. The government of Ghana retains a 30% stake in the company.

On Wednesday April 15, 2009, Vodafone Plc branded Ghana Telecom and Onetouch Vodafone.

The government of Ghana however set up a review committee to look at the Vodafone/GT sale.

The five-member committee headed by a retired Appeal Court Judge was given a 15-point terms of reference and given 90 days to submit the report of its findings to the Ministry of Communications.

The committee was mandated to look at why the National Fibre Optics backbone was included in the sale, justification for the indemnity clause in the Sale Purchase Agreement (SPA) and possibly its removal. The committee also looked at why some of the Ghana Telecom (GT) liabilities were not covered under the SPA, the exemption regime under the SPA in relations to offers of 3G licenses, how much capital Vodafone has invested since the take over and issue about the change of name and headquarters of GT.

The committee submitted its findings and recommended a re-engagement with the management of Vodafone to review the SPA.

While that was going on, the Britain Serious Fraud Office (SFO) got involved. The head of the SFO asked his officials to look into allegations of irregularities in Vodafone’s African dealings, according to the Mail.

With questions being raised about Vodafone UK’s dealings on the continent, can the company be trusted? Is the company in Africa to help do business ethically and to improve telecommunications infrastructure or milk the continent dry and fatten the bank accounts of its owners and managers?

By Emmanuel K. Dogbevi

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