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Stakeholders back BPE on New Generation Telecom

By Prince Osuagwu

Baring any positive twist from what is currently on ground, the $2.5b sale of Nigeria’s national telecommunications carrier, Nitel to New Generations telecom may hit the rocks. This is as fresh information Vanguard gathered from Abuja, indicates that the interests that want the sale of Nitel revoked to apparently favour an indigenous player are getting strong backing from powerful people in government.


The first straw that may spark off this revocation hit the Bureau for Public Enterprises, (BPE’s) acclaimed transparent Nitel bid, Thursday, barely 24 hours after the announcement of New Generations telecom as the preferred bidders, when China Unicom, said to be part of the New Generation Consortium, denied involvement in the whole deal.

New Generations Telecom consortium, was said to consist of China Unicom (Hong Kong) Limited, Minerva Group of Dubai and a local company GiCell Wireless Limited.  But in a swift reaction a Hong Kong_based spokeswoman for the Beijing_based company, Sophia Tso, was quoted by some international media, as denying her company’s involvement in New Generation Telecom that won the Nigeria’s 1st national carrier.

According to the reports, Tso had said that “neither Unicom nor its unlisted parent joined the bidding for Nitel, as Nigerian Telecommunications is known.” And by extension, never committed to the $2.5 billion offered by New Generation Telecoms that won the financial bid.

For her, it was embarrassing to be listed as a part of the consortium when the company had not even signed the Memorandum of Understanding to be a partner in New Generation Telecoms.

Vanguard reliably gathered, that based on this, a group of powerful individuals in government are pushing for the cancellation of the bid process, to protect their interest in some local operators that may eventually emerge winners, perhaps by manipulation, if a fresh bid is called.

However, BPE’s communications with Vanguard indicates that a letter duly signed by the company was presented by the New Generation Telecom consortium and was verified by its advisers, the BNP Paribas, before it gave the consortium a clean bill of health to bid and has not seen any evidence, yet, to the contrary.

The Public Communications department of the Bureau further sent a statement, drawing attention to the denial of commitment to New Generation by Unicom, but said facts to that denial were only played up in the media but not on its table.

According to BPE, there was no going back on the sale, particularly, since there are no evidences yet that can upturned the facts at its disposal.

“While not joining issues with anybody, we wish to state categorically and for the records that the National Council on Privatisation, NCP/BPE stands firmly by the results of the open and transparent bid process of NITEL/M-TEL held on the 16th February 2010.  We have not seen any evidence to the contrary”.

A statement signed by the Head of the BPE’s Public communications department, Mr Chigbo Anichebe, stated that when the Technical bids were received on 5th February 2010 and opened by the Bureau of Public Enterprises on 16th February, 2010, New Generations Communications Limited Consortium included as part of its submission, a Commitment Letter from Minerva Group signed by the Group Chairman, Ahmed Abdullah, accepting to fund the acquisition and another letter from China Unicom (Europe) Operations Limited, signed by one Mr William So, accepting to be its Technical Partner.

Part of the letter, made available to Vanguard, read: “We are pleased to inform you that we are willing to be technical partner to support New Generation Telecommunications Limited Consortium to bid for NITEL, and to provide technical and managerial support on terms to be agreed later, when the bid is finally won. We will also consider equity participation of not less than 20% subject to final agreement with the consortium”

Anichebe said that the letters were immediately sent to BPE advisers, BNP Paribas, for conduct of due diligence and confirmation of  validity.

BNP Paribas was said to have called Mr. Williams So on phone and he did not only confirm the relationship, but went a step further to write an email which read “we have provided a letter to a member of the New Generation Telecom Consortium to confirm that we are willing to provide technical and managerial support to them on terms to be agreed later, when the bid is finally won. I believe you have a copy of the letter”

BPE also argued that even non provision of MOU with technical partners, could not have disqualified New Generation Telecoms consortium which it said already had an operating telecom company, GiCell, as a partner and therefore was assumed, to have the technical competence required to run telecommunications operations.

What this implies is that even the letter from China Unicom was just an addition to the strength of the consortium and so, whether China Unicom were retained as technical partners to the consortium or dropped should not strain the outcome of the bid process.

Nigerians behind BPE Meanwhile, Notable industry stakeholders are backing BPE on the choice of New Generation telecoms’ saying they emerged through a very transparent process. Authorized representative of the Consortium, Mr Usman Gumi, said that with or without China Unicom, the consortiums financial standing was intact.

According to him, the financial backbone of the New Generation Consortium is the Minerva Group of United Arab Emirates which has what it takes to turn around NITEL and give Nigerians good telecommunication services.  For him, attention should be on the Minerva Group, which is the lead financial partner of New Generation Consortium Limited, and not China Unicom which is a mere technical partner.

In the same vein a popular telecommunications Engineer and former staff of Nitel, Engr Titi  Omo-Ettu agreed with Gumi that the uproar about the authenticity of a mere technical partner was unnecessary if a consortium has a strong financial standing.

Omo-Ettu in a chat with Hi-Tech, argued that “anything can trigger a stalemate in any transaction. In this particular case, however, the information available does no show that a stalemate is obvious only on account of Unicom’s statement. If Unicom were the financial muscle of the Consortium, yes there is cause for instant worry. But if it is a technical muscle, it can be handled. In post-bidding, it is not as difficult to find a replacement technical partner once financing is assured as it is difficult to find financing even where technical partner is assured. But the issue is not that Unicom is withdrawing, Unicom is saying it was not in the team in the first place. And credibility matters in these things”.

Omo-Ettu however admitted that, the sale of Nitel this time around represented a fair worth of Nitel license and therefore should be upheld. “We are now auctioning the First National Operator License which a company called NITEL is currently holding. And I can see we are moving close to getting the right value for the License. Of course the fellows who are now managing BPE have a better focus than those of the past who were, more or less, pursuing the agenda of devaluing NITEL so it could conveniently go to their principal’s interests”.

Fears are that cancellation of the process may devalue the national carrier and end up bringing back the stalemate which has trailed its privatisation history from pentascope to Transcorp, before the recent bid process.

The first shot at NITEL came in 2002 from the Investors International London Limited (IIL), with a bid of $1.3billion, but the firm could only pay 10 percent of the offer price. It however applied for an extension but  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 it.

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 pact with the Pentascope in 2005.

Again, Pentascope’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.

That is the development that brought in New Generation telecoms Tuesday last week and why stakeholders are afraid that another stalemate would jinx the National carrier.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.