Telecel faces double hurdle in planned Vodafone Ghana acquisition deal

By Jonas Nyabor

Posted on Thursday, 11 August 2022 16:23
A branch of South African mobile communications provider Vodacom in Cape Town is shown in this picture taken November 10, 2015. REUTERS/Mike Hutchings/File Photo

Following a failed attempt to exit Ghana in 2021, Vodafone is again hoping to offload its assets in the West African country, having agreed on terms with Telecel Group. However, Ghana's regulator, the National Communications Authority, has turned down the companies’ request to seal the deal.

According to the communications minister, Ursula Owusu-Ekuful, Vodafone’s choice of Telecel is “surprising.” “We were concerned that they [Telecel Group] were a very small operator and didn’t have the technical and financial muscle to be able to take on the challenging environment that we have in the telecom sector here in Ghana,” Owusu-Ekuful said on Accra-based Asaase Radio.

Like Vodafone, Telecel Group isn’t particularly pleased with the turn of events and wishes to return to the negotiation table to push for the $500m cash deal.

With its presence in over 30 countries in Africa, offering different telecom services, Telecel’s expansion on the continent has largely been through acquisitions. The company says it is committing $700m over the next three years to drive growth and develop fibre optic infrastructure. Most recently, the group completed a transaction to acquire Tunisia Telecom’s subsidiary in Mauritania, Mattel, in April this year.

Selling to someone with the financial muscle does not necessarily mean they will succeed

“Telecel hopes to successfully conclude this transaction and looks forward to engaging with staff and customers, who are important to the business… Ghana’s business climate suits the business models of Telecel Group and was the key enabling factor, based on which the Group was able to reach agreement with Vodafone,” Telecel said in a statement.

‘Subtle sabotage’

In a statement, NCA said the Telecel-Vodafone deal “did not meet the regulatory threshold for approval to be granted”, after a critical regulatory review and evaluation.


For Fouad Chalabi, a telecoms expert and former Spacefon executive, this was the right decision. “I support the NCA. No disrespect to Telecel, [but] when somebody is taking over Vodafone, which is among the number one telecom firms in the world, you have to check and make sure the transaction meets the rules,” he said in an interview with Joy News.

Tech journalist Samuel Dowuona is however sceptical that the regulator’s opposition is purely on the basis of a lack of technical and financial capacity.

“Selling to someone with the financial muscle does not necessarily mean they will succeed. That is not the basis to succeed in this market. Whether Telecel has got the capacity or not is not the question,” he says.

For him, the current state of Vodafone Ghana requires fresh investment and Telecel or another operator should be given the opportunity to do that.

Crossing the regulatory impediment wouldn’t be the end of the challenges Telecel will face after acquiring the majority stake in Vodafone Ghana.

Tough turnaround

Despite retaining the number two spot as Ghana’s leading telecom operator after MTN, Vodafone’s operation in the West African country has recently seen significant challenges, which has forced the company to reconsider its presence in the market.

Vodafone entered Ghana’s market with high hopes in 2008, acquiring the country’s ailing GhanaTelecom (OneTouch) in a $900m deal for 70% shares, with the government of Ghana retaining a 30% stake. The company has tried, unsuccessfully, to get the government of Ghana to redeem its financial obligations to boost operations.


The operator’s subscriptions have been falling since 2019. Between September 2019 and March 2022, it lost more than 1.7 million mobile voice subscribers.

Dowuona tells The Africa Report that Telecel would be taking over a business that has been struggling to make profits. “Vodafone didn’t do well for itself by portraying itself as an elitist network selling premium packages. Vodafone has not been making money,” he says.

The company’s executives have said, on different media platforms, that the firm has yet to make a profit since the acquisition. Kenneth Gomado, then chief financial officer of Vodafone Ghana, told the press in 2016 that it had so far invested $1.2bn to modernise network infrastructure and quality of service without the corresponding contribution from the minority shareholder.

“As we speak today, we are not making any profit before taxes … we invested $1.2bn, most of which is accruing interest and at the end of the day that puts our pre-tax profit in negative,” he said.

Two years later, then Vodafone Ghana CEO Yoland Cuba expressed the same sentiments, explaining that the situation was the reason for its inability to list on the Ghana Stock Exchange as expected.

Telecel will need a comprehensive plan, building from its extensive experience on the continent, to navigate the challenges on its path of entering Ghana’s complex telecom market and make the deal worthwhile.

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