State and Telekom Malaysia settle Ghana Telecom dispute

9 May 2005

The Government of Ghana and Telekom Malaysia™ yesterday announced that they have reached an amicable settlement in their international arbitration proceedings concerning the pair’s long-running dispute over fixed line incumbent Ghana Telecom (GT). Details of the agreement have not been publicly disclosed, but the state is set to pay TM an undisclosed sum to buy back the Malaysian company’s holding in GT. The settlement remains conditional and the payments will be staggered over a two year period.

In 1997 the state sold a 30% stake in GT to the G-Com consortium, in which Telekom Malaysia™ holds an 85% stake, for USD38 million. TM was given a five year management contract to run the company for the duration of GT’s fixed line duopoly with new entrant Westel. By the time of the contract’s expiration TM presided over a poorly configured network, with just 275,000 fixed lines in service, well short of its mandated 400,000. The new government declined to renew TM’s deal and put the management of the company out to tender. Relations between the state and TM have since deteriorated to the point where the Malaysian company has attempted to sell its stake back to the government and to recover the deposit it had paid for the holding, as well as a significant amount in damages for what it terms ‘unfair treatment’. The government has said that once the dispute was resolved it would buy back TM’s stake and float it on the Ghana Stock Exchange.

Ghana, Telekom Malaysia, Vodafone Ghana