Ghanaian rain the least of the pain for Vodafone’s African adventure

“It’s raining!” shouts Magnus as he flings himself onto my bed at 5am while looking for things to do following the household ban on TV.

He opens the curtains and I open an eye. Rain of tropical proportions.

“Thank you London!” he says, and skips off.

I’m not sure why he’s so pleased. But I am delighted, because today caretaker Jonas can divert the gallons he soaks onto sun-baked earth to our reserve tank instead, so when water looters steal from the mains so they can survive, so can we.

Then I remember Vodafone.

The downpour that’s keeping us in rainforest garden is drowning cables elsewhere in town. There’s no way our broadband will be working.

I call the Vodafone man. “There are major problems,” he says. I ask if it’s the rain, he says no, of course not, then relents when pushed and says the problems could last the day. I hang up and wonder if the call will be used for quality and training purposes.

I switch to the MTN line and watch it whip through credits at unimaginable speed.

Vodafone must be finding it tricky in Ghana. The rain is one problem, but small in comparison to this: a report emerged last week calling its acquisition last year of Ghana Telecom, the state provider, “unconstitutional” and “illegal” and calling for the entire deal to be renegotiated.

It’s a slap in the face to a world class network that has entered a lucrative market with an extravagant promo promising a $1m grand prize which includes a luxury villa in Accra’s exclusive Trasacco Valley, a chauffeur-driven 4X4, motorbikes and scholarships in a draw that will be aired on national TV. Its presence here is inescapable.

On paper, Vodafone bought a 70% stake in Ghana Telecom for $900m in a deal that completed in August 2008.

But the report, commissioned by the incoming National Democratic Congress government led by John Atta Mills, said that "through a complicated series of financial arrangements" the actual price it paid was less than $450m - far less than the annual earnings potential of Ghana Telecom. Analysts say the figure in reality could be as low as $267m.

I call Vodafone HQ to ask about revenues from Ghana. They don’t break them out. So I ask my neighbours how much they spend on their mobile telephones. They estimate $120 a year. Add to that some broadband customers ($500 a year), some mobile broadband (costlier), heavy use by companies and NGOs, and the fact that the Ghana Telecom deal added 1.6 million customers to the Vodafone network, and the revenues start to stack up. It doesn’t take long to make the deal pay for itself.

In all of this it would be unfair not to mention what Vodafone brings to Ghana. It's made the country a key cog in its corporate and social responsibility programme, stepped up health and safety, changed electrical equipment to cut fire risk, and taught safer standards of driving. A spokesman in the UK tells me the company has yet to receive a copy of the report, and that it will decide how to react when the Ghanaian government makes an official statement.

The report, which is certainly available in Ghana, goes on to question why Vodafone's bid was approved when other firms, such as Telkom South Africa were offering higher bids for a lesser stake.

It adds that “although strong allegations were made about bribery and corruption, the committee did not have the powers and resources to investigate these claims”.

Ah! Right on cue, a chance for Atta Mills to act, to right possible wrongs of the former (opposition) government and come up smelling of roses.

Right? Wrong.

Contacted when the report emerged, communications minister Haruna Iddrisu told Ghana’s Joy FM radio station that the ""Government is of the opinion that the Committee overstepped its remit in expressing an opinion on the constitutionality or otherwise of the transaction."

So why such reluctance to act?

The report into Vodafone’s purchase of Ghana Telecom comes at a time when the NDC government is squirming from the fallout of the Mabey and Johnson bribery case. Mabey and Johnson is a British company that specialises in building bridges and it recently was found guilty of trying to bribe officials in a number of countries to secure contracts.

One of those countries was Ghana when the NDC was last in power in the 1990s. Two ministers serving in the current NDC administration have resigned pending an investigation into their alleged role in the bribe-taking scandal. So flinging mud too enthusiastically at the former New Patriotic Party government for its handling of the Ghana Telecom sale risks some of the mud coming back.

And it risks the country's own attractiveness as a place to do business.

Ghana has done well in recent years to market itself as the good news story of Africa.

Compared with its neighbours – Cote D’Ivoire, Sierra Leone and Liberia, that’s not particularly hard, and while Nigeria remains a smog-choked punishment of a place to do business, Ghana is a safe and stable Anglophone alternative just three countries to the left.

Amid the billions set to flow in thanks to oil exploration that’s revealed one of the richest African prospects in years, is $500m or so lost on a telco deal really worth the quibble?