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Unending controversy over NITEL privatization

The on-going bid by the Bureau of Public Enterprises to privatize Nigeria Telecommunications Limited (NITEL) and its mobile arm, M-tel, is igniting controversies that are raising fears. If a statement credited to China Unicom last Monday is anything to go by, there are questions begging for answers.

China Unicom announced in a statement that one of its subsidiaries, China Unicom (Europe) Operations Ltd is interested in NITEL, but as yet, there are no discussions on any “substantive and legally binding agreements.”

In a filing on the Hong Kong Stock Exchange (HKSE) on Monday, the firm said its wholly owned UK unit, China Unicom (Europe) Operations Ltd., “would be interested in exploring the possibility of equity investment in NITEL,” and “indicated its interest in the provision of technical and managerial support services.”

It is unnerving that six days after the bid was opened, a member of the winning consortium is telling the world that there are no “legally binding agreements” on the sale of a corporation it bidded $2.5 billion for. Worse, to say that its subsidiary “would be interested in exploring the possibility of equity investment in NITEL,” after completion of the exercise raises serious questions about the position and interest of China Unicom in NITEL, and by extension, the New Generation consortium.

Further, according to postings on online financial news portals, Bloomberg.com and Dow Jones, the firm in the statement added that a possible investment in NITEL is “subject to certain conditions being fulfilled.”

The firm also disclosed that it has not started discussions on any “substantive and legally binding agreements.”
Controversy ignited over the bid when Sophia Tso, spokesperson for China Unicom denied that the firm is part of the New Generation Telecoms consortium which won the bid for NITEL with a price of $2.5 billion.

Speaking with Bloomberg on telephone from her Hong Kong base last week, Tso said “neither Unicom nor its unlisted parent joined the bidding for NITEL, as Nigerian Telecommunications is known.”

However, Usman Gumi, Managing Director of GiCell, the Nigerian member of New Generation Telecoms, reiterated the Chinese firm’s involvement, which he said only extended to an interest in offering technical and managerial support.
He added the consortium has financial backing from Dubai’s Minerva Group and the $2.5 billion bid is fair value for the firm.

Questions thus arise over the participation of China Unicom (Europe).  For instance, is the “technical and managerial support” GiCell said Unicom is offering part of the $2.5 billion bid, or is the support coming gratis?
An industry source who opted to remain anonymous wondered how bidders without any track record in the industry won the bid.

His words:“Nitel is a prized national asset which unfortunately was ruined by mismanagement. We have made several efforts to sell it in the past without success and we should have learnt  our lesson by now. The right thing to do is to allow a company that knows the Nigerian  environment, a company that has a stake in the country, a company that can immediately revive the organisation. Going for a greenhorn in the industry may take us back to the days of Pentascope and IILL and we will begin another round of endless search for a core  investor,’ he stated.

Further, Gumi was quoted as saying that China Unicom (Europe) would “consider a minimum of 20 percent equity participation on terms to be agreed.” What happens to the remaining 55 per cent equity? Is that what Minerva will be paying for? Just how much is each member of the consortium contributing? The nation waits for answers.


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