ACCRA (Reuters) - Britain's Vodafone (L:VOD) said on Wednesday that plans to return its Ghana operations to profit-making were hampered by the West African country's failure to fulfil its financial obligations as minority shareholder.
The world's largest mobile group by revenue paid $900 million for a 70 percent stake in state-run Ghana telecom in 2008 while the government retained the remaining 30 percent with an enterprise value of around $1.3 billion at the time.
Since the acquisition, Vodafone has put an additional $1.2 billion to modernize network infrastructure and quality of service without the corresponding contribution from the minority shareholder, Kenneth Gomado, chief finance officer of Vodafone Ghana, told reporters in Accra.
The debts were mainly the principal and interest charges on a $550 million investment from the Vodafone Group and a $240 million loan from the World Bank's IFC.
Gomado said the government's inability to meet its obligations had resulted in accumulation of debt due to increasing interest charges on the investment loans, and he noted that Vodafone Ghana had yet to declare profit since its launch.
The company has delayed plans to list on the local stock exchange until ongoing talks with the government to redeem its obligations conclude, Gomado said.
"As we speak today, we are not making any profit before taxes ... we invested $1.2 billion, most of which is accruing interest and at the end of the day that puts our pre-tax profit in negative," he said.
"We've grown and improved quality and profitability of the business, but as of now I don't think we are able to list because there are certain balance sheet issues that we've been discussing with the government in the past three years that needs to be resolved," Gomado said.
Vodafone Ghana has around eight million subscribers on its network and is the second largest mobile operator in subscription and revenue after South Africa's MTN (J:MTNJ).
Serpil Timuray, group head for Africa, Middle East and Asia-Pacific, said despite the challenges, Vodafone would continue critical investments to build on growth, adding that the company's future in Ghana looked bright.
Also operating in Ghana are Millicom International Cellular's Tigo, India's Bharti-Airtel (NS:BRTI), Globacom of Nigeria and Sudan's Sudatel Expresso.