M&A

3 November, 2009

UPDATE 2-Ghana says will not abrogate Vodafone deal

* Gov't has no plans to abrogate deal

* Will re-engage Vodafone on Fibre Optic Backbone

* Wants to discuss popssible return of landed properties

(Adds details)

ACCRA, Nov 3 (Reuters) - Ghana has no intention of abrogating Vodafone Group Plc's (VOD.L) $900 million purchase of a 70-percent stake in Ghana Telecommunications (GT), but will re-engage the company on some issues, the government said on Tuesday after a review of the deal.

The announcement comes two weeks after a government committee ruled the agreement illegal in a move that unsettled investors in one of Africa's most developed economies.

"Government ... has no intention of abrogating the SPA (sale and purchase agreement)," the government said in a release.

The deal by the British mobile phone company in August last year was harshly criticised in parliament at the time by the National Democratic Congress, which came to power in January.

The committee argued the price was too low, that the government did not receive an adequate return and that Ghana should have retained Ghana Telecom's national fibre-optic cable as a strategic asset.

The reassessment of the Vodafone deal comes at the same time the West African country reviews of a reported multi-billion dollar deal by Exxon (XOM.N) to purchase Kosmos Energy's stake in the giant offshore Jubilee oil field.

Analysts have said the confusion over the two major deals could risk scaring off foreign dollars in one of the region's most attractive investment destinations.

RE-ENGAGEMENT

The government said it agreed with a ministerial review's conclusion that future talks should be handled by technical experts and negotiators, and that it should now 're-engage' with Vodafone management.

"The re-engagement would also include issues relating to the operation of the National Fibre Optic Backbone," it said, stressing it should be an "open-access network that serves the whole country with competitively-priced services."

The government is also interested in discussing the possible return of some GT investments including landed properties and other assets, it added.

A Vodafone official was not immediately available.

The country, the world's No. 2 cocoa producer, has seen foreign direct investment surge in recent years to near $1 billion per year according to the World Bank, and aims to start producing oil from its huge offshore reserves in 2010.

Analysts have said continued foreign investment will be crucial in Ghana's goal to boost cocoa production and become and serious oil exporter.

(Reporting by Kwasi Kpodo; Writing by Mark John and Richard Valdmani)

Source: http://www.reuters.com