US embassy cable - 05ACCRA1868

C O N F I D E N T I A L ACCRA 001868 
 
SIPDIS 
 
DEPARTMENT PLEASE PAS COMMERCE FOR MARIA RIVERO 
TREASURY FOR LUKAS KOHLER 
USTR FOR LAURIE-ANN AGAMA 
MILLENNIUM CHALLENGE CORP. FOR ROD NORMAN 
 
E.O. 12958: DECL: 09/14/2015 
TAGS: GH, ECON, KMCA, ECPS, EINV 
SUBJECT: GOG BUYS WESTEL TO END SEVEN-YEAR-OLD DISPUTE 
 
REF: ACCRA 1389 
 
Classified By: EconChief Chris Landberg for reasons 1.5 (b and d) 
 
1. (SBU) Summary: Western Wireless International (WWI), the 
primary shareholder in Ghana's embattled second national 
operator Westel, has sold its interest in the company to the 
parastatel Ghana National Petroleum Company (GNPC) for USD 10 
million.  WWI dropped its international arbitration case 
against the GoG as a result of the sale, thus ending the 
seven-year-old dispute.  The future of Westel, however, is 
unclear, as the GoG must now decide whether to sell to a 
private investor or run the company itself.  End Summary. 
 
The Deal 
-------- 
2. (SBU) Westel Managing Director Bill Taylor (protect) told 
Econoffs September 13 that WWI received USD 10 million from 
the parastatel GNPC on September 12, thus completing the sale 
of WWI's entire 70 percent stake in Westel to the GoG 
(reftel).  The GoG-- through the GNPC --is now the sole owner 
of Westel.  The GNPC has named Ghanaian attorney and 
television commentator Ursula Owusu as interim Managing 
Director.  Taylor will depart Ghana after a one- to two-week 
handover period.  His departure will signify the end of WWI's 
involvement in Ghana's telecom market.  WWI dropped its 
international arbitration case against the GoG as a result of 
the sale. 
 
Westel's Future 
--------------- 
3. (C) Taylor said the GoG must move quickly if they intend 
to sell Westel without diminishing its value.  The company's 
finances will only allow for 60 to 90 days of operation 
before additional cash will be needed.  Taylor said GNPC 
Managing Director Stephen Abankwa claimed his mission was to 
maintain Westel's value until an investor could be found, but 
hinted that GNPC could opt to maintain ownership of Westel 
and contract out the management of the company.  (NOTE: the 
parastatel Ghana Telecom (GT) is run under a similar 
arrangement.  END NOTE.)  Minister of Communication Albert 
Kan-Dapaah, however, assured Taylor that an investor would be 
found as soon as possible, adding that GNPC would not be 
allowed to control the company. 
 
Comment 
------- 
5. (C) Comment: Although the GoG's purchase of Westel has 
ended the seven-year-old dispute, it was not WWI's preferred 
outcome, and probably not the best result for Ghana's 
consumers.  Had GNPC not exercised its right of first 
refusal, WWI claims it could have sold Westel for the same 
price to MTN of South Africa in June, and that by now MTN 
would have given the company the resources it needed to 
compete with GT and expand its operations.  Instead, the 
result is that the GoG now owns both of Ghana's fixed line 
operators.  Nevertheless, this was a mutually acceptable 
resolution of a dispute that tainted investors' perceptions 
of Ghana and complicated US-Ghana relations.  End Comment. 
LANIER