Why Govt Must Hands Off NITEL’

By Efem Nkanga , 10.13.2010 


The President of the Association of Licensed Telecoms  Operators of Nigeria (ALTON), Engr Gbenga Adebayo has said that for the proposed new owners of the Nigerian Telecommunications to succeed, the Federal Government must hands off political and operational control of NITEL. 


Gbenga in a chat with THISDAY said  that in the past, interference on the part of the government on the running of NITEL had made it impossible for past owners to make headway with the organisation. He argued  that except the federal government relinquishes political control of Nitel, problems of the past will keep rearing its head. According to him, government must not just sell off Nitel alone, but needs to leave its interest in Nitel. 


He also stated that a major re-engineering of the ailing Nitel infrastructure is required to make it competitive. Though,  he commended the Federal government for giving approval to New Generations to acquire Nitel, he stated that the telecoms market is very tough. He   advised the consortium to  take its time to rebuild and reorganise Nitel in order to make it competitive again.Adebayo stressed that there is a lot of work to be done on Nitel and cautioned Nigerians against expecting too much too soon.Reiterating that there will be no quick fix for Nitel, he however stated that  it has the potential to be a great telecoms firm if its properly rebuilt and its recovery processes are not interfered with by the government.


The Presidency on Tuesday following over six months delay finally gave approval for the New Generation consortium to acquire NITEL and its mobile arm, M-TEL for $2.5billion dollars. The Bureau of Public Enterprise BPE had disclosed that President Goodluck Jonathan had given  approval to the Bureau to conclude the privatisation process and also approved the payment of the outstanding salaries and allowances owed the staff of the two organisations.


New Generation Telecommunications Consortium made up of China Unicom of Hong Kong, Minerva Group of Dubai and Nigeria’s GiCell Wireless Ltd by the presidential approval has been given the go ahead to pay a bid security of $750 million within ten calendar days as a pre-condition for the issuance of an offer letter in its bid to acquire NITEL and M-TEL.   The balance of the bid amount of $1, 750 million should be paid within sixty days from the date of the issue of an offer letter. 


The Consortium had on the 16th of February emerged the preferred bidder with an offer price of $2.5 billion during the opening of financial bids for the privatisation of NITEL and M-TEL. The reserve bidder,  Omen International came second with an offer of $956,996,091. Brymedia emerged third with $550 million. Other contenders who bided for the acquisition of 75% NITEL and its M-Tel subsidiary include   AFZI/Spectrum Consortium. fourth with a bid of 375.5Million. and MTN Nigeria Communications Ltd, which bided $25Million for SAT-3 only.


Following the emergence of the preferred bidders, an outcry was raised that the process had flaws.Although this was denied,    some members of the consortium  said they had no knowledge of the deal. This controversy consumed the job of the then Director General of the BPE, Dr Christopher Anyanwu and  led to the NCP setting up a seven man committee in March to conduct further due diligence on several bidders. 


The National Council on Privatisation (NCP) had at its meeting of March 12, 2010 set up an eight-member ad-hoc committee under the chairmanship of the Attorney-General of the Federation to review the NITEL/ M-TEL sale transaction. The Committee after further due diligence found out that the transaction complied strictly with due process as outlined in the BPE’s Procedures Manual and that necessary approvals were obtained through the Technical Committee (TC) and the NCP at every stage of the transaction.Recall that several attempts to privatise Nitel had in the past met with failures. 


In 2001,  Investors International London Limited (ILL), made an attempt to acquire Nitel, but  defaulted in paying the bid price of $1.317 billion and lost the attempt. After the ILL failure,  Pentascope of Netherlands was appointed to revamp Nitel, but that attempt also failed and led Nitel down the path of failure. The engagement of Pentascope by the Bureau of Public Enterprise BPE to manage NITEL in 2003 led to the monumental waste of the resources of NITEL. 


Though Pentascope was expected to inject life into NITEL, it ran the entity aground before the deal was revoked by the Federal Government. Pentascope was said to have met about N17 billion in Nitel coffers,  but by the time it left Nitel, it left a debt profile of more than double the amount it met in NITEL’s treasury when it came on board   Also functional lines of NITEL, which was said to be over 400,000 thousand was reduced to half as at the time Pentascope left.  Senator Anyanwu has however assured Nigerians that the Pentascope deal is being investigated by the senate.


Folowing the Pentascope experiment, Orascom of Egypt also attempted to acquire Nitel with $256.5 million but lost the bid to Transcorp which acquired NITEL for $500 million.  The sale to Transcorp in 2006 was the most successful with Transcorp acquiring a 75%  share of NITEL/M-Tel which was later reduced to 51% due to issues of finance. Transcorp at the time got a $500 million facility from a consortium of banks led by UBA Plc to acquire the shares.The Transcorp attempt did not revive Nitel and was finally revoked by the Federal Government on June 1st last year.




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