An Overview of M & A Activities in Ghana’s Telecom Industry


M & A activities in Ghana have been notable in the telecommunication industry. The telecom industry’s transformational process in Ghana has made it a very vital component for development. Previously, Ghana’s telecom industry was characterized by monopoly, low tariffs and inefficiencies. It was based on this that the Government of Ghana decided to sell part of Ghana Telecom (GT) to Telekom Malaysia Berhard.
This led to the first ever merger in the telecommunications industry in Ghana which was a three year Technical Services Agreement (TSA) where G-Com Limited, a consortium led by Telekom Malaysia Berhard acquired 30% shares of Ghana Telecom from the Government of Ghana (GOG) for USD 30 million on the 20th of February 1997. This was in a bid to restructure Ghana‘s telecommunications industry to make it commercially viable. Exactly three years later when the contract expired, GOG did not renew the contract due to failure on the Telekom Malaysia Berhard partners to meet its operating targets agreed upon in the TSA. The Government of Ghana contract abrogation with the G-Com Limited was an example of a merger deal gone wrong due to political and operational issues and litigation that ensued, resulting in the Government of Ghana paying huge international arbitration cost awarded in favour of G-Com Limited.
Not long after the ligation challenges were over, the Ghana government entered into a management partnership with Telenor Management Partners (TMP), a Norwegian consortium. The deal was subsequently assigned in July, 2002 to develop a Business Plan for Ghana Telecom covering the period 2003 – 2007. Following the acceptance of the Business Plan, the Government of Ghana entered into a Management Contract Agreement with TMP in February 2003 to implement the proposals in the Business Plan with the mandate to help improve the sector by providing additional telephone lines, extending telephone services to every corner of the country as well as developing the existing quality of service to position the company in the global market.
Finally In 2007, the Government of Ghana sold 70% shares in the enlarged Ghana Telecom to Vodafone; on a cash free, debt free basis for $900 million. Ghana Telecom’s assets comprised of GT fixed line operations, cellular operations (OneTouch), Broadband operations, GT call centre (Exzeed), SAT-3 submarine Fibre optics landing station and National Fibre Optics Backbone.
Data available clearly indicates that, the acquisition of Ghana Telecom by Vodafone brought about an increase in the growth rate which has led to superior market performance and a sharp increase in profitability. Profitability in 2007 (last year as Ghana telecom) was - 33.82% as compared to profitability in 2009 (year after takeover by Vodafone) - 62.29.
Another interesting acquisition, which can be described as the GSM evolution in Ghana, also started essentially in November 1996 with the launch of the first GSM service by Scancom Limited under the brand name of Spacefon. In September 2007, Africa’s largest mobile group, Mobile Telecommunications Network (MTN) acquired Investcom Limited which owned Scancom (GH) Ltd. the operators of Areeba in Ghana. MTN offered to acquire the Areeba’s holding company Investcom for $5.5 billion, as part of its growth strategy in emerging markets. At the end of 2005 Investcom had 4.9 million customers in Africa, the Middle East and Europe. The Beirut-based company had owned mobile operations in Benin, Cyprus, Ghana, Guinea Bissau, Liberia, Sudan, Syria and Yemen as at that time. MTN offered USD3.83 per Investcom share and an alternative of USD2.08 in cash and 0.18 MTN shares per Investcom share.
Another notable acquisition was when Western Telesystems Company (WESTEL) became a fully-owned state enterprise following the Government of Ghana’s acquisition of the two-thirds equity stake held by ACG Telesystems Ghana, via the Ghana National Petroleum Company (GNPC). The Government of Ghana had already owned one-third of WESTEL. After becoming a wholly owned subsidiary of the Ghana National Petroleum Corporation (GNPC), Westel was floated in an IPO following the opening up of the market. Western Wireless International (WWI) from the U.S. acquired a majority stake, but in its allotted duopoly period installed fewer than 3,000 of the 50,000 lines stipulated by its concession and its own target of 100,000 lines per annum. 
In October 2007 Celtel International, a subsidiary of Kuwaiti based Zain Telecom (formerly named the MTC Group) announced it had signed an agreement to acquire 75% of Western Telesystems Ltd (Westel) from the Government of Ghana for USD 120 million. The Government of Ghana remained a shareholder in Westel with a 25% holding at that time of the purchase through the Ghana National Petroleum Corporation (GNPC). Bharti Airtel in 2010 also acquired Zain Telecom’s African operations for $10.7 billion of which Zain Ghana was a subsidiary. 
The number of subscribers or users has always mattered in Ghana’s telecom industry, a sector which has long been driven by transformational M&A activities. M & A deals carried out in Ghana’s telecom industry from 2004 to 2016 is estimated at $1.92 billion. Corporate deal-making in this industry has been driven by both the necessity to create economies of scale and the convergence of services as consumers increasingly demand interplay between their fixed line and mobile devices.  
In recent times, Airtel had been in talks with rival Millicom International Cellular for a possible merger in Ghana, Airtel Africa has already sold out its operations in Burkina Faso and Sierra Leone to Orange which acquired a 100% of the two companies’ share capital for a reported $900 million. The consolidated revenue of the two companies is estimated at 275 million Euros. With Orange likely to acquire Airtel’s operations in Ghana, and reaching a merger deal with Tigo, this will represent a ‘new paradigm in Ghana’s telecom industry and would boost massively the subscriber base of the merged entity to make it the second largest telecom operator in Ghana in terms of subscriber base.
The sheer scale of this transaction is bound to trigger more deals in the sector in 2018 and beyond. And is likely to pave the way for more future mergers of not just mobile service providers but also between smaller technology companies in Ghana who will begin to realize that joining forces makes sense at a time when everyone in the industry faces highly capital-intensive demands for investment in technology and building networks.
More consolidation is expected, particularly in Ghana, for instance, the ailing GLO Network looks very primed to be acquired due to its dwindling subscriber base despite its massive investment into technological equipment and machinery and expanding its network across Ghana. 

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