Vodafone has acquired a 70% stake in Ghana Telecom from the Government of Ghana. Total consideration is US$900 million on a debt-free, cash-free basis, which would imply a total enterprise value for Ghana Telecom of approximately US$1.3 billion. The Government of Ghana will retain a 30% stake in the company which is the key fixed-line player in the country and the number three mobile operator.
Commenting on the transaction, Arun Sarin, Chief Executive of Vodafone, said: “Ghana is one of the most attractive markets in Africa with mobile subscribers growing at more than 55% per annum and mobile penetration around 35%. 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. I expect that our investment will generate substantial benefits for Vodafone and for the Ghanaian economy and we are delighted that we will be working in partnership with the Government of Ghana.”
Vodafone identifies several principal benefits from the deal:
exposure to a growing Ghanaian telecoms market;
total target population of 24 million with more than 50% under the age of 25;
real GDP growth of 6.3% in 2007, contained inflation and a stable political background;
low mobile penetration at around 35%, with 2.7 million subscribers added in 2007;
significant additional growth prospects from recent oil field discoveries;
majority control of the number three mobile player (17% market share and 1.4 million customers) and leading fixed-line operator; and
substantial turnaround potential.
Regarding the latter, over the next five years Vodafone expects Ghana Telecom to invest over US$500 million in its operations and network, restoring and expanding network coverage and completing and integrating the fibre backbone.
Vodafone will also look back to previous experience, planning to leverage its experience of rapid network deployment in India and other emerging markets, as well as making available ultra-low cost handsets to accelerate Ghana Telecom's growth. Vodafone intends that Ghana Telecom will raise its mobile market share over time to around 25%, reversing recent underperformance. As part of the transaction price, it has been agreed that the Government of Ghana’s fibre network assets will be transferred to Ghana Telecom. Closure of the transaction is anticipated by the end of September this year. In addition, Ghanaian parliamentary approval is necessary.