By Prince Osuagwu
Nigeriaâ€™s first national telecommunications carrier, NITEL is synonymous with stalemate. From the first attempt at selling the national carrier when it became obvious that continuing allowing government to manage the success of the institution would mean extension of the rape of its economy, there has never been a sweet story.
Even the celebrated sale of the carrier a fourth night ago to New Generations telecom at a whopping $2.5b could not write off the negative history trailing its sale and management woes. And just when industry faithfuls were rejoicing that NITEL has for the first time, attracted a commensurate value to its enviable facilities, Vanguard Hi-tech gathered that the sale could be as good as reversed due to alleged powerful interests working against the preferred bidder.
History of failed transactions
This situation is however notÂ new to sale transactions on NITEL.Â In 2002, Federal government through BPE, tried to sell Nitel to the Investors International London Limited (IIL), at a bid of $1.3billion. But the firm could only pay 10 percent of the offer price. It however applied for an extension butÂ was refused by the BPE, leading to a loss of about $131.7 million, which caused a serious management crisis in the First Bank Plc that bankrolled the deal.
Following the failure of IIL, the Federal Government in 20O3, through the BPE, experimented with the idea of Management Contract for NITEL with the Pentascope of Netherlands. Over Nl b was alleged to have been lost to the contract by the government before it severed relationship with the Pentascope in 2005.
Again, Pentascopeâ€™s exit provided another opportunity to sell NITEL and some telecommunications companies indicated interest. The Orascom Telecoms of Egypt and the Newtel International were to later top the table after paying a non refundable bid bond of $20million each.
However, Orascom, on December 29,2005, emerged the preferred bidder after staking $256.53million in the second round of the bidding compared to the $127.5million it offered in the first round for 51 percent equity in NITEL.
Unfortunately for Orascom, its bid was considered low and was rejected by the Federal Government, even when the Egyptian company has agreed to take over all liabilities, including staff pension, other remunerations and business liabilities like third party debts incurred by Nitel.
After the three failed attempts, Federal government in 2006 sold 75 per cent of its equity in Nitel to Transnational Corporation of Nigeria (TRANSCORP) for $750 million. The remaining 25 percent, according to government were to be given to Nigerians by way of Initial Public Offering (IPO) in the stock market. But that was not to be.
Meanwhile, TRANSCORP, was only able to pay $500million for 51 percent stakes with a promise to pump in at least a minimum of N8 billion new funds into NITEL between 30 days and 100 days after the take_over, to reposition it as a profitable telecommunications venture.
But instead of developments, Transcorp from day one, struggled to stand on its feet and eventually ended up dwindling the remaining fortunes left by Pentascope .
Though it cited government interference to why it could not do all it intended to do, Federal government felt the right thing to do was revoke the sale and look for a financially viable buyer that can bring back the fortunes of Nitel. The sale was eventually revoked in 2009.
How New Generation telecom emerged and fear of losing the bid
Following the revocation, government charged the BPE to find new buyers for at least 75 percent equity in NITEL. The Bureau in July 2009, quickly placed advertisement for expressions of interest from prospective investors for the acquisition of at least 75 % equity in Nigerian Telecommunications Limited (NITEL).
In the advertisement, prospective investors were invited to apply to acquire either at least 75 % equity in the entire NITEL conglomerate or a stake in one or several of its components, namely, SAT_3; domestic fixed line telephony; national fibre_optic transmission backbone; CDMA network; and MTEL (GSM).
It also noted 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 the NITEL networks.
At the deadline for the submission of technical and financial proposals on February 5, 2010, BPE said fourteen prospective investors undertook virtual data room on Nitel and M_tel.
The investors were MTN Nigeria Communication Ltd; Etisalat Nigeria; Brymedia (WA) Ltd; Finetek.com/Ericsson consortium; Omen International Ltd (BVI); Fugar Technologies and MTI Consortium. Others are Telefonica Consortium; Globacom Nigeria Ltd; Conau Ltd; Dansacom Technologies Ltd; Adison Consulting; AF21/ Spectrum Consortium and Foneama.com.
BPE said that six out of the 14 consortia, Brymedia (WA) Ltd; AF21/ Spectrum Consortium; MTN Nigeria Communication Ltd; Globacom Nigeria Ltd; Omen International Ltd (BVI); and New Generation Telecommunications Ltd, met the deadline for the submission of the technical and financial proposals.
On February 16, 2010, BPE opened financial bids for NITEL with five prospective investors that were pre_qualified to bid for the acquisition of NITEL.Â At the event, New Generations Telecommunications Consortium bid of $2.5 billion for unbundled NITEL saw it emerge the preferred bidder while Omen International offered $956 million also for NITEL as a whole, to become the reserve bidder.
The other bidders like Brymedia Consortium offered $551 million for NITEL as a whole; AFZI/Spectrum Consortium, $375.5 million for NITEL as a whole and MTN Nigeria Communications Ltd, $25 million, for only SAT_3.
However, 24 hours after the sale, there was a twist in the whole process when China Unicorn, touted to be a technical partner to the preferred bidder, issued a press statement that it had nothing to do with either the $2.5b bid or the preferred bidder itself.
The furore generated by that statement put a dent in the sale process and perhaps, led to the suspension of the Director General of the Bureau, Dr Chris Anyanwu last week, even as the bureau explained that by its books whether China Unicorn was a technical partner or not could not disqualify New Generations Telecomâ€™s bid because the preferred bidder has a local operator in its consortium.
However, the National Council on Privatisation (NCP) has at the weekend, set up a seven_member ad_hoc committee to undertake further due diligence on the prospective investors that bid for the sale of NITEL and its mobile arm, M_tel.
This was the outcome of the meeting of the body, chaired by the Acting President, Dr. Goodluck Jonathan, which held at the Presidential Villa, Abuja at the weekend
The chairman of the ad_hoc committee is the Attorney General of the Federation, Prince Adetokunbo Kayode. Other members of the committee are the Minister of Finance, Mansur Muktar; Secretary of the Government of the Federation, Mahmud Yayale Ahmed; Minister of State for Commerce and Industry, Humphrey Abah; Principal Secretary to the Acting President, Mike Oghiadomhe; the chairman of the technical committee of the NCP, Mohammed Hayatu_Deen and the acting Director General of the Bureau of Public Enterprises (BPE.), Ms. Bolanle Onagoruwa. The committee was given seven days to submit its report to the NCP.