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New Generations Telecoms buys NITEL for $2.5b

By Emma Ujah & Prince Osuagwu
ABUJA—AFTER a rigorous bid which saw five consortia, jostling for the soul of Nigeria’s first National Telecommunications carrier, NITEL, the New Generations Telecommunications Consortium, Tuesday, emerged winners of the new NITEL with a bid of $2.5 billion.

The amount is approximately  N375 billion, at the Central Bank of Nigeria’s current rate of N150 per dollar which gives the preferred bidder 75 percent ownership of the moribund first carrier.

New Generations Telecommunications Consortium is the former Telefonica. The consortium included China Unicom (Hong Kong) Limited, Minerva Group of Dubai and local company GiCell Wireless Limited.  Announcing the result of the bid, BPE’s Head, Public Communications, Mr. Chigbo Anichebe, revealed that Brymedia Consortium bided $551million for the whole of NITEL, while MTN Nigeria offered $25million for SAT-3 only.

AFZI/Spectrum Consortium, was also said to have bided $375.5million, and Omen International, $956million for NITEL as a whole, while New Generations Telecommunications Consortium’s $2.5billion bid threw other bidders off balance to help it grab the Nitel pie.

Nigeria’s first National Telecommunications carrier, NITEL, sold to the New Generations Telecommunications Consortium

Anichebe said that after the bid, New Generations Telecommunications emerged the preferred bidder while Omen International emerged the reserved bidder, adding that the winning was, however, subject to final approval by the National Council on Privatization, NCP, headed by the Acting President, Dr. Goodluck Jonathan.

With this development, New Generations Telecommunications is expected to pay about $750 million within 10 days from the date of approval by NCP while the balance is expected within 60 calendar days of the council’s approval.

The Federal Government in a renewed effort to sell NITEL after revival efforts by Transcorp failed, inaugurated an interim technical board, July 2009, and gave it a 60 working-day ultimatum to conclude sale of the first national carrier.

In further trying to help the board and BPE, government also decided to unbundle the sale of NITEL, giving room to buyers who may be interested in some parts of NITEL, all in the bid to get the whole sale processes right.

Following this move, BPE, in July 2009, placed advertorials, in both local and international media, requesting 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 Analogue System, TACS.

Acquisition of NITEL fixed lines

It, however, clarified 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.

Following the advertorial, about 13 or more companies, including some prominent telecom companies already operating in Nigeria, like Globacom, MTN and Etisalat, indicated interest.

According to BPE, Expressions of Interest, EOIs, applications, were also received from companies like Omen International Limited (BVI), Summit Group, MTI Consortium, Finetek.Com, Ericsson Consortium and MTNL Limited, India.

However, the announcement of bid interests from second national operator, Globacom and MTN  by BPE, sparked off a furore by industry enthusiasts who said that either way, any of the existing operators buying NITEL would create an imbalance in the telecoms field of play.

Some saw Glo’s bid in particular as creating another monopoly, which was why NITEL, as big as it was, could not engender strong telecoms development before the privatization of the sector.

Competition challenges

Apparently acting on the public outcry, PBE, however, on October 15, 2009, bared the existing GSM operators including Glo, MTN, Zain and Etisalat from buying M-Tel, the mobile arm of Nitel and the SAT3.

BPE said it acted on the instruction of the NCC which believes that the purchase of Mtel by any of the companies would present competition challenges and could conflict with the regulator’s guidelines and licensing conditions.

However, the government’s 60-working day ultimatum, which was supposed to produce new owners for NITEL by November 23, 2009 failed. BPE said its failure to sell NITEL as the 60-day deadline expired, November 23, was due to the strike action embarked by NITEL workers protesting the backlog of salaries owed them.

It contended that the strike action kept the doors of NITEL facilities locked and could not allow investors to do physical due diligence on the NITEL assets.

On January 14, 2010, however, a pre-bid conference was held at the Transcorp Hilton Hotel, Abuja by BPE. It had the Executive Vice Chairman of NCC, Engr. Ernest Ndukwe and the 14 investors who had qualified to bid for NITEL and its mobile arm MTEL in attendance.


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