Telenor expands presence in Africa with Ghana deal

Telecom Management Partner (TMP), a wholly owned subsidiary of the Norwegian telecommunications group Telenor ASA, has entered into a three-year management agreement with Ghana’s biggest telecommunications operator – Ghana Telecommunications Company Ltd. (GT).

“TMP is pleased to have entered into this agreement with Ghana Telecom, and we have the greatest respect for the challenges involved in this work. Our main impetus will be to develop Ghana Telecom into a solid operator in the African telecoms market,” said managing director of Telecom Management Partner, Christian Erlandsen.

A key component of the agreement is for TMP to help Ghana Telecom provide a minimum of 400,000 additional fixed telephone lines. Ghana has only 240,000 fixed telephone lines and a population of approximately 20 million people.

The government of Ghana and G-Com Ltd., a consortium led by Telekom Malaysia Bhd. (TM), own Ghana Telecom. The government of Ghana has 70 per cent of Ghana Telecom’s shares while the latter has the remaining 30 per cent

The arrangement between the GT and TMP fell short of what the Ghanaian authorities had wanted. The Ghanaian authorities among other things were looking for a possible transaction on an ownership level, but Telenor had pronounced earlier on that it was slowing down on its investments abroad.

“Telenor will not be making any investments as part of the agreement, but TMP will provide GT with management expertise through a regular management agreement,” said Steiner Ostermann, a Telenor spokesman.

Telenor is not new to the African continent. In May 2000, Telenor was awarded one of three satellite network licenses in Morocco.

Though Telenor has operations throughout Europe and Asia, the deal in Morocco was the company’s first investment with a permanent staff in Africa, according to a statement by Knut Digerud, head of Telenor’s corporate international business development, published in Telenor’s official newsletter.

Three years after their Moroccan entry, Telenor has mastered the workings of doing business on the continent. Telenor already has satellite operations through its subsidiary Taide, which supplies Internet solutions over satellite covering the entire continent. In addition, Telenor Global has international agreements with a number of companies in African countries.

The agreement between GT and TMP was arranged in the shadows of a stormy relationship between GT’s shareholders. The government of Ghana has accused the Telekom Malaysia-led consortium of not playing the role of a strategic investor.

“Our so called strategic investor has brought not even a cent as working capital to Ghana Telecom. Ordinarily, a strategic investor is expected to bring in either working capital or special know how, or both,” said Ghana’s Minister of Communications and Technology, Felix Owusu-Adjapong.

Telekom Malaysia has subsequently offered to offload its 30 per cent shares in Ghana Telecom. The government of Ghana has agreed to buy the TM stake after an independent revaluation of the shares.