As African governments move to sell off incumbent telecommunications companies to save them from collapse, controversies that may scare away potential investors are clouding the privatization process.
Several African governments are privatizing incumbent telecom companies after failing to recapitalize them, hoping that new owners will roll out new plans and services including data, video conferencing and Internet backbone offerings in addition to voice services.
The financially troubled telecom companies need a quick cash injection to save them from collapsing, but deregulation is being marred by accusations of illegal activities in the privatization process and the selection of investors.
In Ghana, the sale of Ghana Telecom to Vodafone International of the U.K. has been taken to court, while in Zambia, the sale of the Zambia Telecommunications Company (Zamtel) by Minister of Communications and Transport Dora Siliya is also being challenged in the courts of law.
Members of the opposition Convention People's Party (CPP) in Ghana are challenging the constitutionality of the sale agreement, stressing that the process adopted by the government in selling Ghana Telecom contravened the company's code and the country's constitution.
Ghana Telecom was sold in July last year to Vodafone at an approximate value of US$1.3 billion plus a cash injection of $500 million to boost the company's operation, bringing the total to $1.8 billion.
In Zambia former Minister of Communications and Transport William Harrington is challenging the sale of Zamtel, claiming that Minister Siliya has not correctly followed the privatization process.
"Siliya's actions need to be investigated because it is allegedly a total breach of parliamentary and ministerial code of conduct," Harrington said.
In December last year, Siliya signed a memorandum of understanding with RP Capital of the U.K. on behalf of the Zambian government in connection with a $2 million contract to value Zamtel's assets and liabilities and find a buyer of a percentage of shares in the company to make it viable.
Zamtel is a government-run communications utility that provides mobile, fixed and internet services.
Last week, Siliya said time is of the essence, so that the Zambian government does not have to continue to subsidize Zamtel. At the same time, Siliya said the Zambian government does not want to just give away the company to an investor, which is why RP Capital was awarded a contract to value the company.
Siliya added that mobile costs in Zambia were the highest in the region due to Zamtel's monopoly of the international gateway and its inefficiencies.