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Why we ‘re interested in Nitel — GLO, MTN

By Prince Osuagwu

The two operating GSM companies in Nigeria, Globacom and MTN that have indicated interest in buying the ailing National carrier Nitel, have explained why they are interested in the bid process.

The two companies spoke to Vanguard Mobile week exclusively on their interests in the Nitel pie. While the second National carrier, Globacom  said it was strictly a matter of national interest, MTN said it was a matter of taking the business opportunity that was starring it in the face in the juicy Nigerian telecom market.

This is coming at the heels of announcement by the Bureau for Public Enterprises BPE, last week, of interests of about 13 companies, including Glo and MTN, to acquire Nitel

Globacom said that as the second national carrier, it would be unpatriotic to allow the continued mismanagement of the first carrier.
The operator also denied that its interest was to get hold of SAT3, which is regarded as the money spinner in the venture, revealing exclusively to Vanguard that its Glo1 which is equivalent to sat 3 was already in Lagos, Nigeria.

Speaking to Vanguard, the Group Chief Operating Officer of the company, Mr Mohameed Jameel, said that Nitel is a huge national asset and should be a thing of pride to the country, but “unfortunately, the enterprise has not been well managed and has continued to decay over the years. Previous attempts to privatise it have not yielded desired result. We believe Nitel can be revamped and it can work.

We have proven with the success of Glo that Nigerians can do it. Glo is a Nigerian company which has shown how passionate it is about the country. It has the technical and financial competence to turn around the fortunes of the company and make it work. Glo is well placed to restore the pride of Nitel” he added.

Jameel also revealed that Nitel will be run as a separate venture if Glo buys it, adding that “we are not interested in Nitel because of SAT 3. We already have Glo 1 which is wholly owned by Globacom while SAT 3 has 23 owners. We have invested close to $800m in Glo 1. It does not make any sense trying to buy Nitel because of SAT 3 when we already have our own submarine cable owned solely by us.

This gives us 100% control over it. It is going to serve several countries. With SAT 3, Glo will be one in 23, while with Glo 1, Glo is one in one” he said.
A week after a 60-day ultimatum was issued to the board of Nigerian Telecommunications Limited (NITEL) to find a core investor, 11 firms have expressed interest in the acquisition of at least 75 per cent equity in the company.

But for the Corporate Services Executive of MTN, Mr Wale Goodluck, “in view of our  long term commitment to deliver qualitative,  world-class telephony services to Nigerians , MTN is currently exploring the opportunities presented by the public sale of NITEL and its resources”.

Vanguard had sometime reported interests of Globacom and MTN in Nitel and just Tuesday last week, the Bureau of Public Enterprises (BPE) confirmed that it had received Expressions of Interest (EOIs) applications from MTN and Globacom among other eleven companies.Other companies BPE said had indicated interests, included Etisalat Nigeria, Omen International Limited (BVI), Summit Group, MTI Consortium, Finetek.Com, Ericsson Consortium and MTNL Limited, India.

Others are Galaxy Backbone Plc, Telefonica Consort-ium, Metro PCS Communi-cations Inc, Anas Network Services Limited and Brymedia (W.A) Limited . BPE actually revealed that the companies indicated their interests following its advertorials, July 2009, in both locally and international media, requesting interests from prospective buyers to reach it on or before Friday, August 28, 2009.Confirming Vanguard’s report that the federal government may have decided to sell the ailing national carrier in pieces BPE revealed that its advertorial actually requested interested buyers to apply for either at least 75 per cent equity in the entire NITEL conglomerate or a stake in one or several of its components like the mobile (GSM) arm, MTEL,  SAT-3, CDMA network, domestic fixed line telephony, national fibre-optic transmission backbone and Analog System (TACS.)The statement reiterated that preference would be given to bidders who desire to acquire NITEL fixed lines, transmission backbone, MTEL and SAT-3 components together, while those bidding separately for MTEL must be ready to make necessary investments to detach MTEL from NITEL networks.

Conditions

The BPE however give the conditions that any of the consortia that qualifies for the next stage are expected to pay a non-refundable fee of $25, 000 for bidding documents and execute the confidentiality and non-disclosure agreement. This is even as it said that an evaluation committee had been constituted to independently assess the submissions of each consortium .

The Nigerian Communications Commission (NCC), has also been charged with the task of conducting a fit and proper test on each bidding consortium to participate in the bidding exercise.All these are coming just after a week the goverment inaugurated the new interim board of directors to run the affairs of NITEL and an order that they must complete the sale in 60 days. Earlier before the launch, Vice president of Nigeria, Goodluck Jonathan, had promised that the government would get the sale of Nitel right, this time around
Jonathan spoke in Manhattan, New York, through his Senior Special Adviser on Economic Matters, Mr. Sam Worlu, at an Investors’ Forum organised by BNP Paribas Consortium, the transaction advisers in NITEL privatisation, at the instance of the National Council on Privatisation.  He said that the Federal Government was pursuing a deliberate policy on privatisation, spanning various sectors of the economy with the firm belief that the private sector must be the engine of growth and job creation. He said Nigeria, through NITEL privatisation, was offering investors great opportunity to build strategic position in Africa ‘s largest market with strong growth potential.

For him, “with population of over 140 million, the country displayed real strong GDP in 2008 and is expected to grow 6.5 percent and reaching US$120 billion in 2009, despite global recession and with low telecommunications penetration, the country offered high potential to investors and remains the largest telecom market in Sub-Sahara Africa, due to its large and fast growing population, strong external and internal investments and positive industry reforms”.Nitel’s former sales had always ran into a stalemate.

The privatisation history of Nitel began in 2001 when the government through the Bureau for Public Enterprises, BPE, initiated a process once considered as having the powers to transform Nitel to a modern organization, expose its workers to standard global practices and arm them with new and competitive technologies. After a heavily criticised bid process, Pentascope which was partly funded by a consortium of Nigerian banks, acquired 51 percentage of equity in Nitel. It managed to raise the estimated meager 400 lines which Nitel had before privatisation, to about 440,000 and took the mobile arm of the company, Mtel which also competed and won GSM license same year, to a little over a million connected lines.

Barely three years after, the deal snapped. Government felt Pentascope was too slow for its liking and may have exhausted all its magic, since it was only struggling with just a million mobile lines at a time when other telecom companies like MTN and Zain(then Econet wireless and later Vmobile) which took off same time with pentascope’s Nitel and Mtel, were crossing the 5 million mark .

However, Pentascope also blamed the government for being too interested in the running of Nitel, saying that its contributions rather impaired every good moves it (Pentascope) made as a core investor, to reviving Nitel.

Nevertheless, the government was determined to sell Nitel, again. This time, according to it, to a more serious investor. So, in 2006 Transnational corporation, Transcorp, acquired 51 per cent of Nitel for $500m. But since November 14 of that year when it officially became the core investor in Nitel, Transcorp seemed to be struggling to keep a standing position. It  allegedly reduced the workforce by 70%, disengaging about 7,000 staff out of the 11,000 left by Pentascope. The fortunes of the company, further deepened as the 440,000 Nitel lines and above 1 million Mtel lines left by Pentascope, nosedived to miserable 40,000 and 200,000 lines respectively under Transcorp.

While the government through the Ministry of Information and Communications was to quickly point out again that Transcorp has failed, Transcorp says government was responsible for its fate in the whole affair. Such is the blames and counter blames that have kept the true position of things away from Nigerians and left Nitel, Mtel at a grind. But arguments notwithstanding, the Federal government in July voided the sale of Nitel to Transcorp and appointed a technical board to manage the carrier.


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