The Papua New Guinea Government has axed the proposed sale of 51 percent of Telikom PNG Ltd to Econet Wireless Group.

A special sitting of the cabinet  voted not to proceed with the sale, announced  six months ago by  the Minister for State Enterprises and Information Dr Puka Temu.

Confirming the Cabinet’s decision, Prime Minister Sr Michael Somare said the NEC had decided they would re-look at the Telikom sale by re-examining their options, including calling for fresh tenders.

The sale of PNG Telikom had created  problems for the Somare Government. Before the change of position, it was faced with two legal suits, a major split in the ruling National Alliance Party, serious questions in the leadership of Prime Minister Sir Michael Somare, an extended delay to the privatisation process and a possible legal challenge by Econet Wireless Group in the event that the deal falls through.

One commentator said it is inconceivable that an arm of the government should take the government to court.

It is also beyond belief that the government through its representative, the Independent Public Business Corporation (IPBC), State Enterprises Minister Dr Puka Temu, Telikom Board, Angoram MP, Opposition Leader Peter O’Neill and the Telikom Union should be embroiled in a fierce debate over the affair, resulting in the sacking and reinstating of the Telikom Board.

The former government of Sir Mekere Morauta had encountered controversy when it sold the government-owned Papua New Guinea Banking Corporation (PNGBC) to Bank South Pacific, but that’s nothing compared to this row.

The whirlwind sale process began after questions were raised over the credibility of the government’s chosen bidder, Econet Wireless Group (EWG), of South Africa, by O’Neill and former Prime Minister Sir Mekere Morauta.

The debate was fuelled by comments from Trade and Industry Minister Paul Tiensten while in Fiji, saying his government would abandon EWG in favour of ATH Consortium, a Fijian company in a joint venture with some indigenous investors.

Tiensten was reported to have said the government preferred to have 70 percent shareholding in the telecommunications monopoly remaining in Papua New Guinea, while ATH was favoured for a 30 percent shareholding.

The ATH Consortium made a winning 108 million Kina (about US$30 million) bid for Telikom PNG in 2002, but lost out when the current government got into office last year.

Econet chief Strive Masiyiwa said the Papua New Guinea government’s position had not changed and that the press reports had been refuted.

Masiyiwa has structured a deal with JSE Securities Exchange-listed Altech, which will see EWG contributing its various assets, minus its Lesotho, Kenya and Zimbabwean operations, while Altech injects US$70 million.

Further calls by Morauta and O’Neill disputed mainly the credibility and financial capability of Econet. But the government, through IPBC, remained firm, forcing the Opposition to seek Parliament mandate to halt the sale. Parliament successfully passed a motion calling on the company not to be sold.

At the same time, a major rift also occurred in the ruling NA party with key party member and Angoram MP Arthur Somare, who is also the son of the PM, publicly speaking against his colleagues and supporting the Opposition to halt the sale.

This also failed to deter the government through IPBC and Temu.
As a result, the most surprising thing happened on December 7. The Telikom Board, which supposed to go with the government, went to court seeking orders to stop its proposed sale to Econet Wireless (PNG) Ltd.

The group’s board filed the application at the Waigani National Court a day before it was revealed that Econet Wireless Group of South Africa had agreed to take up 48 percent instead of the original 51 percent.

Telikom named the IPBC, Temu and the State as defendants. The plaintiffs are Telikom, board chairman Gubon, directors Frank Kini and Leo Tale and acting managing director Martin Veisame.
They are seeking a declaration that a share sale and purchase agreement dated July 1, 2004 for the proposed sale of Telikom by IPBC to Econet Wireless PNG Ltd is illegal and void, an injunction to restrain the IPBC and the State from completing or carrying into effect any sale of Telikom to Econet and an injunction to restrain Dr Temu from directing the Telikom board to register any transfer of shares to Econet.

Meanwhile, PM Somare has refused to take sides in the Telikom sale saga that is threatening to divide his National Alliance party.

With his son Arthur and Temu embroiled in a public row over the sale, the Prime Minister reckoned the public debate was healthy.

He said it was healthy to have open and informed debate on matters of national interest. “It is also good that ordinary Papua New Guineans are given the opportunity to have their say in what the government is trying to do with this important State entity,” Sir Michael said.
Temu responded to the court action by sacking the entire board of Telikom PNG.

He took the action because of the defiant action of the board through newspaper advertisements and its decision to commence court action to stop the partial privatisation process.
Telikom (PNG) Ltd employees came in to support the board by threatening to go on sick leave on December 8 to protest the sacking of the entire board.

Somare intervened by reinstating the sacked Telikom Board and Acting Managing Director of Telikom.

Over the course of 2003, and much of 2004, various bidders have been courted, resulting first in Korea Telikom being lined up as a potential buyer. When that deal fell through under mysterious circumstances at Christmas last year, the African company Econet Wireless was brought in.