Thursday, July 24, 2008

Fwd: [From WSIS] When will the National Communications Authority stand up?

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The NCA is an agency of the government with oversight to, in effect, regulate the telecommunications sector and implement terms of Ghana's National Telecommunications Policy. According to the policy (2004) that can be downloaded from the Internet, while the Ministry of Communications is "responsible for the definition and elaboration of Government policy regarding telecommunications", the NCA has a number of roles that it plays in implementing the policy, which include: "regulation of competition, including interconnection; tariff regulation consistent with Ministry policies; monitoring of operator activity, performance, and compliance", and last but not least "consumer protection."

Reading the policy itself is enlightening, for the policy sounds robust. There is a section on "Principles of Transparent regulation" that explains that NCA "shall promote public participation in and awareness of its activities and ensure that the public has adequate access to sector information." Only last week, I checked to see whether the website of the NCA that is still under construction, and with some limited information about the sector, has managed to offer some new information. There is still nothing. Neither is there what there ought to be--as stipulated in the policy: an Annual Report in collaboration with the Ministry of Communication publishing "up-to-date industry information…" made available "for public review."

Protection for Whom?
In what would prove to be an unprecedented move last year, the Authority not only threatened ONETOUCH and MTN to stop selling re-charge cards, but that they should also improve the quality of their service, otherwise huge fines would be slapped on them. This was a historic feat of epic proportions it appeared, for even with the psychedelic MTN plane then-still-perched at the Tetteh-Quarshie interchange and MTN flags virtually drowning any Ghanaian ones, the Authority barked. At the eleventh hour, the Authority yielded, allowing both mobile providers get away with only an agreement to improve their services.

I don't know about you, but I don't call that consumer protection.

Giving customer service a new life?
Then there is the recent case of Gateway Broadcasting Services (GBS) that entered the country in October last year. I do not know of anyone--and I know three official establishments around my workplace use GBS--that has been able to get through to GBS customer service. Beyond one who had given out his mobile number to subscribers (regrettably, he is no longer working for the company), no-one else can be contacted when one's service is cut off -- either accidentally or not. When your payment has been made, the several landlines that have been given will forever put you through to a call centre operating outside Ghana in…Southern Africa, where, it stands to reason, there is a more clinical approach in dealing with you, given that the people are not in the country. As helpful and "nice" as they sound, nothing beats having Ghanaians help when I want my service re-connected , even if I have to have to lose my voice in doing so.

The anecdotes aside, such continuous practices remain an indictment of the NCA's work. As a regulator of the telecommunications industry, it behoves it to ensure standard regulation--as stipulated in the policy. To wit: "all public telecommunications operators shall be required to establish service level agreements with their customers, which identify the minimum quality of service standards to which customers are entitled, and the remedies and compensation available when service falls below such standards."

Concrete steps
The biggest step to ensuring regulation, in my humble opinion, would seem to be a clear and necessary *adoption* of the National Telecommunications Policy as a working document for all in the first place! Another issue is of toll-free numbers. The other day, the sixth biggest bank called to inform me that they now have a toll-free number that operate 24/7. If banks can do it, why not our MDAs? And certainly, why not NCA? Just a small query: I noticed the toll-free number works on the ONETOUCH network for now. In the event of government passing through any privatisation of GT by way of a totally-unnecessary emergency bill, will Vodafone not seek to make profit by disbanding the toll-free nature that GT has a great interest in maintaining?

Nigeria's NiTel to be Privatised…for Vodafone?
As if the attempt to privatize Ghana's national provider Ghana Telecom is insufficient, British-based Vodafone is ready to hit the Nigerian market with the acquisition of ECOWAS neighbour Nigeria's only landline provider. Rumours and accusations of the phone company being "beleaguered" and "inefficient" don't wash with me. They are code-words for any excuse to privatize. An article in Nigeria's *Punch" newspaper actually goes further arguing that: "…we can be certain about one thing: NITEL is currently bedeviled[sic] by multifaceted problems. These problems include malfunctioning lines, erratic billing system, poor customer satisfaction, infrastructural decay and a backlog of worker's salaries…" It seems to me that chance would be a fine thing were NiTel to escape privatization.

NiTel Privatisation Not New
As far back as May 2002, then-President Obasanjo was planning a divestiture of the state-run phone company. It had been scheduled for March of that year, but had to be postponed for September 2002. It is interesting to note that still at that time, 51% was what was being offered to the so-called strategic investors!

On a more serious note, whereas the incumbent Ghanaian administration has put forth 70% of GT to be privatized, even the horror stories associated with NiTel have warranted 50% to Vodafone. Why such discrepancy one wonders? Is it that Ghana Telecom has more of these calamities at its doorstep than NiTel? Let's examine them for a second. Last time I looked, GT was offering broadband4u (; dialup4u; ExZeed company which offers 24hour service to ONETOUCH subscribers, where MTN has not a 24-hr hotline, and Tigo's is non-existent (exists only as a number); a mobile provider since 2000 (albeit itself bedeviled with astronomical prices when it started, with sim cards then going for around GHC150!); Ghana Telecom University; EasyFone (which enables landlines to be set up more easily than ever before).

According to the reports I've been reading, M-Tel, NiTel's mobile operation that is a year younger than NiTel (having been established on October 2001), has only 176,000 subscribers. Compare that to MTN Nigeria that has 15,873,000 active lines. Switch to Ghana, and we find that where MTN Ghana is around 4 million subscribers, with ONETOUCH around 1.4m. That is subscribers over one million, yet Nigeria's is able to attract only a fraction. Despite this, it is being sold for 50%!

Is it me, or is there something odd about the whole rationale of the GT purchase?

Still always about politics?
Then I think, and think some more, and remember how early last year, South Africa's Standard Bank, operating under Stanbic Bank, was so keen to take over state-owned Agricultural Development Bank (ADB). One of its main motivations for the attempted sale (which incidentally, the government, according to financial papers two weeks ago have *de-prioritized*) was so that it could use the entry of Ghana as a gateway to penetrate the Nigerian market. A year ago today, Reuters reported that Standard Bank had bought a part of Nigeria's IBTC Chartered Bank Plc, which expertise is in investment banking with 55 branches across Nigeria. Standard Bank spokeswoman Kim Howard would say that "If you are going to have a pan African strategy, you have to include Nigeria."

Looks like this time, they decided to strike Nigeria after an attempted one here in Ghana. Whether they will succeed remains moot. Whatever will happen with the sale of GT, it has become crystal-clear that the stage has certainly been set for a new revolution before our very eyes.

Forget the Industrial Revolution. We are all sitting at the cusp of a revolution that implicates a sector so critical to our lives we could never have imagined. To think that a consortium of former MTN executives are bidding—so the telecoms newsletter Balancing Act reports – for NiTel is not just a reflection of the motivation of big people with big capital, but where the next wars might be fought. Forget your Cold War. Prepare yourself for the Telecoms Wars.

Posted By Emmanuel.K.Bensah II to From WSIS at 7/24/2008 03:02:00 AM

Wednesday, July 23, 2008

MTN Ghana denies tax evasion charges


MTN Ghana denies tax evasion charges
BY DAMARIA SENNE , ITWEB SENIOR JOURNALIST [ Johannesburg, 27 June 2008 ] - MTN has denied it is evading its tax and social responsibilities in Ghana, stating it was the top taxpayer in Ghana in the past three consecutive years.

MTN paid a total of $172.1 million in taxes in 2007, with 2006 payments adding up to $127 million, and 2005 taxes coming to $103 million, says Mawuena Azo Dumor, MTN Ghana's corporate services executive.

The denial follows a statement by Solomon Abam Quaye, the district chief executive of the Awutu-Senya region. He alleged that telecoms companies operating in the districts were evading their tax and social responsibility obligations, which resulted in low revenue generation.

Click here
Quaye named MTN, Tigo, One Touch and Kasapa as those refusing to pay up.

Modern Ghana reports that Quaye's office "met with the companies to prevail upon them to pay their taxes, but to no avail; and that – apart from MTN, which has paid something small – the rest have refused to pay".

"He said letters and bills have been sent to the companies informing them about the need to pay their taxes to the assembly, but none had responded. Quaye called on the companies to pay up their taxes and that the assembly would have no option but to take legal action against them," the report says.

Breaking it down

Dumor says MTN Ghana's payments included withholding tax, value-added tax, pay-as-you-earn taxes and custom duties.

MTN's 2007 tax payments included $8 million in withholding tax, $43 million in value-added tax, $0.9 million of pay-as-you-earn taxes and $5.5 million in custom duties, she says.

These figures represent payments outside of property rates for telecommunications cell site roll-outs and other fees charged by local government assemblies as operating fees, Dumor adds.

"It is clear that the district chief executive [DCE] unfortunately is unclear about the difference between corporate taxes, local government property rate/operation fees and corporate social responsibility investments," she says.

Fragmented regime

Dumor concedes there have been challenges with standardising the tax payment regime in Ghana.

However, the industry is working closely with the regulators and the sector ministry to address those disparities, she says.

"Operators were recently informed at a meeting with the honourable minister for communication that a directive had been sent to the various local government assemblies that this standardisation process would be addressed within the next one month time frame."

In the interim, further payments were to be deferred, she adds. The deferred payments are probably the fees cited by the DCE, which he erroneously called "taxes" in the corporate sense, she says.

Corporate social responsibility

Dumor also contends that MTN has invested heavily in social responsibility initiatives in Ghana.

Scancom Ghana donated $20 million to the Ghana Water Company, and MTN provides educational scholarships to about 400 students, she says.

In addition, MTN has committed $600 million towards the refurbishment of the country's major referral centre for all maternal health cases, she points out.

Damage control

Dumor says the Ghanaian Ministry of Communications has noted the publication of the tax evasion allegations, and supports efforts to ensure the DCE is acquainted with the relevant distinctions.

The government also supports MTN's view that property rates and operating fees are separate from corporate taxes, as well as social responsibility, she says.

"MTN is making efforts to engage with the DCE to clarify his comments and the company is aware that other operators that were also mentioned in the article are doing the same."


Thursday, July 10, 2008

Fwd: Ghana Telecom Majority Sale to Vodafone: Potential Threat to National Security of Ghana


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Ghana Telecom Majority Sale to Vodafone: Potential Threat to National Security of Ghana

The sale of majority shares of Ghana Telecom, GT, to Vodafone will have the potential to diminish the integrity of Ghana's sovereignty and threaten its national security.

Since taking over power of the state of Ghana in 2001, the New Patriotic Party, NPP, government led by President John Agyekum Kufuor, has not ceased playing political games with the telecommunications sector of the country. The expected sale of GT to the British-based Vodafone is ample testimony that the Kufuor administration is bent on handing over a strategic asset of our country to all-comers, within the circuit of neo-colonization and world imperialism.

When the British government offered recently to pay for the medical bills of pregnant women of Ghana I could not help myself to thinking that there was a string attached; there is no free lunch in the international system. It is commonplace knowledge that in the capitalist world economy nations have tended to pave the way for the profit interest of private corporations in their dealings with the foreign countries they expect to exploit. So, there you have it.

At the time of writing this article, both the government of Ghana which has the controlling authority over GT and Vodafone of Britain had announced versions of completion of negotiation for the latter to acquire 70% majority ownership of Ghana's leading telecommunications corporate agency of the state. A Reuters' news report released simultaneously in Ghana's capital city Accra and London on Thursday July 3, indicated that Vodafone Group had "paid $900 million (454million pounds) for a 70 percent stake in Ghana Telecom, the African country's third largest mobile phone operator," news carried the story.

According to the Reuters news story, the agreement signed between the government of Ghana and Vodafone in Accra "still requires approval of the country's parliament." In that regard, "Vodafone spokesman Simon Gordon said it was expected" that the parliamentary approval will be "given by the end of the third quarter of 2008."

When I broach the fear of threat to national security of Ghana in connection with the negotiated GT-Vodafone deal, I have in mind the infamous political episode that ended with swapping some citizens to the United States for the release of former President Jerry Rawlings' cousin Michael Soussoudis from American prison. The Soussoudis case remains a clear indication as to why and how the integrity of national security of a developing country like Ghana can be compromised easily by the infiltration of foreign intelligence agents for the collection of vital information. Did Ghana learn any useful lesson from the Soussoudis Spy Swap case?

Who knows what could happen to Ghana when foreigners are given unfettered access to the nerve center of the country's only significant telecommunications superhighway outfit in this day and age of advanced Information and Communications Technology, ICT.

Meanwhile, the leading opposition political party in the parliament of Ghana has issued a statement raising serious questions about the process and content of the reported deal signed between the Ghanaian government and Vodafone. The opposition National Democratic Congress, NDC, questions why the GT-Vodafone deal was for 70% acquisition instead of the advertised 66.77% shares.

In a press statement released July 3, the NDC parliamentary opposition expressed "disappointment at the general lack of openness and transparency in the privatization of the major National asset (GT), which has major National Security and Economic implication[s]." The statement indicated that several telecommunications companies from around the world, including "a local Ghanaian-led consortium," had expressed interest in GT in October 2006, "when the Government of Ghana begun a process of identifying a strategic investor to acquire between 55% and 65% of the equity of Ghana Telecom (GT) and to take over management of " it's operation. In that context, the NDC DOCUMENT
posted on July 3, 2008, stated: "The minority wants to know why Government is exclusively negotiating with only Vodafone plc UK without consideration for other bidders who are likely to offer higher bids than Vodafone, and address the socio-economic needs of the country."

"In March 2008, overtures were made to Vodafone plc UK seeking an offer. Vodafone's offer as we were told from Government's own sources was $960 million with stringent caveats still far below the Minority expectations of $1.5 billion or more for the value of GT (subject to its own internal valuation and audits to be conducted during its due diligence process)," the NDC document stated.

In news reports regarding completion of negotiation with Vodafone, the Kufuor administration invokes rising expectation from the deal, suggesting higher level of efficiency and technical competence in Ghana's telecommunications industry. While the government's statement assures Ghanaians of benefits from the GT-Vodafone agreement, it seems to be silent on Vodafone's profit interest, as if Vodafone were a charitable organization.

Vodafone sees its principal benefits in the GT acquisition deal in terms of "Exposure to the attractive and growing Ghanaian telecommunications market," in a country with "total population of 24 million with more than 50% under the age of 25" and with "real GDP growth of 6.3% in 2007, contained inflation and a stable political background," according to a statement on Vodafone's website (, accessed on July 4, 2008. The statement notes also that Ghana has a "low mobile penetration at c.35%, with 2.7 million subscribers added in 2007." More interestingly, Vodafone notes "significant additional growth prospects from recent oil field discoveries" in Ghana.

A fair question to ask is that given the positive indicators identified by Vodafone and the prospects for growth, what stops Ghanaians themselves from managing operations of GT in order to realize the benefits for the country, as opposed to giving away the hen that is expected to lay golden eggs, so to speak? In the possible answer to this question lies the issue of diminishing sovereignty of Ghana: Why can't Ghanaians do for themselves what others can do?

In addition to the positive indicators associated with GT mentioned above, Vodafone recognizes it is the third largest mobile telephone player in Ghana "with approximately 17% market share and 1.4 million customers as at 31 March 2008." In addition, GT is the "leading fixed line and broadband operator with c.99% of the total number of lines and c.90%market share of the retail ADSL market." Vodafone has noted also that GT had "revenue growth of 9.3% in the 12 months ended 31 December 2007 …." Again, it is fair for one to ask why would Ghana hand over majority controlling share in a corporate entity that has the market data indicated by Vodafone?

Of course, it is no wonder that Vodafone has recognized the "Substantial turnaround potential" of GT and expects "to invest US$500 million in its operations and network, restoring and expanding network coverage and completing and integrating the fiber backbone." However, the parliamentary opposition, NDC, has raised its ire with "the inclusion of the National Fiber Optic backbone constructed at the cost of $100 million with a loan from China, which has never been part of Ghana Telecom's (GT) assets," in the Vodafone transaction. "We demand to know why this [fiber optic] has been included as part of Ghana Telecom's assets as the second phase of this ICT infrastructure highway is yet to commence," NDC's press statement stressed.

The parliamentary opposition notes also that selection of Vodafone contravenes "A major requirement as was advertised by government for a strategic investor" with "significant fixed wire line operations experience." As it turns out, "Vodafone is the world's largest mobile telecommunications group …," according to the corporation's statement on its website. In this regard, Ghana's parliamentary opposition states, "The selection of a mobile only network operator (Vodafone) clearly flaunts the Government of Ghana's own non negotiable selection [criterion] that states the successful bidder must have significant experience operating Fixed Wire Line telecommunications network with (a minimum of 10 million lines/subscribers)."

In connection with the need for experience in fixed line operation, the parliamentary opposition NDC noted, that "This requirement cannot be met by Vodafone plc UK as it is a wireless mobile network operator and has no real fixed network operations record experience, no unbundled broadband internet experience. As such they may abandon fixed network operations in favor of highly profitable mobile wireless unit unless there are legal safeguards."

Active Ghanaians may recall that the GT-Vodafone deal is not the first time the Kufuor administration has promised the country one thing and delivered another in the telecommunications sector. In 2002, the Kufuor administration's Minister of Communications, Felix Owusu-Adjepong (MP, NPP-Akim Swedru) told Ghanaians he was inviting a strategic investor in GT and brought in Telenor Norway which turned out to be an expensive "management consultant." The Telenor deal took place after politically motivated ousting of Telekom Malaysia orchestrated by Owusu-Adjepong.

Unlike the other opposition political parties in Ghana such as the Convention People's Party, CPP and PNC that have chickened out of commenting on the GT-Vodafone deal, it is commendable that the NDC has mustered the courage to air its disagreements with portions of the agreement, even though it is not against the sale, per se. Yet, the NDC cannot be looked at as an angel regarding using the state-owned Ghana Telecommunications Ltd, GT, as a political cash cow.

Four months before Ghana's 2000 general elections, the NDC government, led by ex-President Jerry Rawlings, sold 15% more shares of GT to Telekom Malaysia for which the Asian multi-national paid $100 million in cold cash. (Ref. "Telekom Malaysia to Buy 15% More in Ghana Telecom for $100 Mln," at Business News of Thursday, 17 August 2000. Source: Bloomberg L.P).

Since there was no public accounting of the $100 million paid by Telekom Malaysia, the perception that the NDC administration used that money for its electioneering campaign cannot be challenged. Hence, refusal of the NPP government to renew Telekom Malaysia's GT contract in 2001 could be considered truly as motivated by political consideration. Of course, this view is not intended to hold brief for Telekom Malaysia whose performance in Ghana left more to be desired.

It is interesting and disturbing also that with the arrival of Telenor Norway management consultant on the Ghanaian telecommunications scene, the Kufuor administration made high-flying pronouncements about potential benefits and raised expectations of Ghanaians similar to what it is doing with the GT-Vodafone deal.

In the process towards hiring Telenor, Felix Owusu-Adjepong promised Ghanaians 400,000 fixed line telephones in short order. Almost seven years to date, GT is short of the 400,000 fixed line telephones. In this regard, why must Ghanaians believe the Kufuor Administration's promise of high expectations from the GT-Vodafone deal?

Unlike the Telenor arrangement, Vodafone has protected itself with the provisions of United States Securities Exchange Act of 1934. Ghana will incur a hefty price if and when it decides to get out of the GT-Vodafone deal.

Given the degree and intensity of reportage of the GT-Vodafone deal globally, it is clear the whores and vultures of international big business are celebrating a good hunting day on the carcass that the NPP government of Ghana has delivered on a golden parachute.

The writer, Yaw Adu-Out, WOODBRIDGE, Virginia; is the author of "Ghana, In Search of Illusive Positive Change: A Review of the First Kufuor Administration" (Available Online)

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Published: 7/9/2008