The Ghanaian government has acquired a 100% shares of the Telecommunications Company, AirtelTigo, for US$1.
The Minister of Communication and Digitalization, Ursula Owusu-Ekuful, disclosed this in a news report by CNBC Africa on Wednesday, April 22nd 2021.
Bharti Airtel is a global telecommunications company with operations in 18 countries across South Asia and Africa.
Minister Ursula explained that the current state of AirtelTigo and the circumstances under which its shareholders decided to leave the market was what led to the acquisition of the company at $1.
According to her, this would offer the Ghanaian government financial liberty to reinvest into the company and bring it out of the challenges the Telecoms industry is facing.
Late last year, Airteltigo began the negotiation to sell 100% of its shares to Ghanaian government as its market troubles mounted.
Ursula said the government had renegotiated many of the loan facilities AirtelTigo had acquired and reached a high level of debt forgiveness.
As a means of salvaging this situation, the Ghanaian government and the company’s initial shareholders have agreed to equally share a US$100 million facility acquired from Standard Bank. This loan facility is one of the most significant debts on the company’s books, the minister said.
Ursula further disclosed that the government worked closely with the Ministry of Finance in all the negotiations. She added that the shareholders of AirtelTigo are not transferring the shareholder credits which they’ve advanced to the company.
In the proposed agreement, the Government of Ghana will acquire 100% shares of AirtelTigo along with all customers, assets and liabilities. Basis of the agreement is that all operations of the telco will be taken over by the Government of Ghana, making AirtelTigo a state-entity.
Ursula said the unsustainable non-controlled joint venture will be handed to over to the government, who will make efforts to revive the company by making suitable investments while protecting the interests of the customers, employees and all other stakeholders.
According to her, “That’s one of the main items hurting the balance sheet of the company, one hundred per cent of all the loans have been forgiven more or less. They are not seeking repayment of those loans.
“There were also some commercial facilities that the company took, key among them is a $100 million facility from Standard Bank and with that also, AirtelTigo has taken 50 percent of that facility, so the company is now just saddled with 50 percent of that liability. These measures also helped free the company from the burden that it was under,” she said.
The minister indicated that these kinds of developments are part of the dangers that a country is opened to with multinational establishments in critical sectors.
“Government isn’t going anywhere. That is the danger when you have multinationals, what impact the decisions they make may not be exactly the same as what your own national companies will take into consideration. For them, they have the option of leaving to go back to their home region, but we are not going anywhere, and so it is in our interest to also grow local entrepreneurs in the space and the government is committed to doing that, maybe this will provide us a vehicle to also do that even more,” she added.
She is optimistic that the negotiation will give the company a fresh start. She explained that any interim management that would take over would have a good balance sheet that can attract investments to the company.
AirtelTigo is a dynamic and innovative brand providing a wide range of telecommunications services including mobile voice, data, mobile financial services and business connectivity solutions.
The transaction is expected to close on the mutually agreed conditions. Airtel and Millicom, along with Ghanaian government will expeditiously complete the closing. AirtelTigo had already written off its investment in the prior accounts. No further provisions of any material nature are envisaged, the press release stated.
On a consolidated basis, Bharti Airtel reported a net profit of Rs 853.60 crore in Q3 FY21 as against net loss of Rs 1,035.30 crore in Q3 FY20. Net sales during the quarter jumped 24.2% year-on-year (Y-o-Y) to Rs 26,517.80 crore.