New Suitors for NITEL/MTEL

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Vice-President Namadi Sambo

National Council on Privatisation picks NATCOM Consortium and NETAD Consortium to carry out the liquidation of the Nigeria Telecommunication Limited and its mobile arm, MTEL

By Anayo Ezugwu  |  Aug. 18, 2014 @ 01:00 GMT

AT last the federal government has approved the liquidation of Nigeria Telecommunication Limited, NITEL, and its mobile arm, MTEL. The National Council on Privatisation, NCP, on Monday, August 4, picked NATCOM Consortium and NETAD Consortium, from the 17 firms shortlisted for the liquidation. The NCP took the decision at its third meeting of the council for the year which was presided over by Vice-President Namadi Sambo.

Musa Sada, minister of mines and steel development, said the two firms led others shortlisted with 90.7 and 90.2 percentage scores, respectively. He said the government was working hard to ensure that the two firms bounced back better. “The criteria are being followed and out of these 17 firms shortlisted, two are qualified for request for proposal issuance. And this is what the council deliberated today and approved the qualifications of the two companies. The two companies are NATCOM Consortium and NETAD Consortium, and they came top with 90.7 and 90.2 per cent, respectively. You will agree with me that efforts at getting NITEL back on stream have been very strenuous, because of so many issues, so many problems; but this time around, there have been strong efforts so that we do not go back to what we had before.

“With what has been put in place, we are very confident that we will only move forward to take us to the appropriate destination. The idea here is for us to have a working institution not necessarily a situation where these assets are just dispensed with for whatever reasons. From our discussions today, we are making sure that these assets do not go to somebody who, for other considerations, will want to own and keep them. Our target is to make sure that NITEL/MTEL comes back. It has very robust assets and it will be a very good thing for the country. Mobile telephones and networks are not substitutes for land lines, and that is why we are doing everything to be able to bring it back to work,” he said.

Assets up for bid in NITEL include the licences and the spectrum, nationwide fixed wired networks, national right of way duct system, ibre optic transmission backbone, and the CDMA network system. Others are international gateway earth stations, microwave transmission equipment/network and towers, and other core assets. The assets up for sale in MTEL are the licences and the spectrum, national right of way; GSM network, including mobile switching centres, base station controllers, base transceiver stations and the general packet radio services. Others are the analogue system and other core assets.

Realnews had, on November 25, 2013, reported that it was not the first time the federal government had attempted to privatise NITEL. In 2001, the Investors International of London Limited, IILL, emerged the preferred bidder of NITEL. IILL bid $1.317 billion to acquire 51 percent stake in NITEL and MTEL on November 28, 2001. It proceeded to pay a 10 percent deposit of the bid sum amounting to $131.7 million to the BPE. However, it could not complete the payment of the sum when it was due in February 2002. This prompted the federal government to forfeit the $131.7 million deposit.

In 2003, Pentascope, a Dutch firm, took over NITEL and the company generated N51.43 billion as revenue in one year from the 555,055 connected lines. But 23 months after the takeover, the connected lines dropped to 440,000 and the firm incurred a debt of more than N40 billion. The federal government’s deal with Pentascope was later revoked.

In 2005, Orascom, an Egyptian telecoms giant, also failed to buy the company because its 257 million dollars bid was below the price of NITEL. The takeover of NITEL by Transscorp in 2006 was celebrated in the country but the excitement was short-lived after the 500 million-dollar deal failed to turn around the fortunes of the company. Also, the last attempt to sell 75 percent stake in NITEL/MTEL to New Generation Telecommunication Consortium of China for $2.5 billion was terminated due to failure of the Chinese consortium to pay the bid price.

Ever since, every move to save the moribund company has failed. In February, 2012, the NCP approved a guided liquidation for disposing the beleaguered telecommunication company and MTEL, but a claim by the Assets Management Company of Nigeria, AMCON, that NITEL was heavily indebted to some banks stalled the planned liquidation. AMCON claimed that NITEL/MTEL’s indebtedness to the banks amounted to N52 billion.

The debts were part of the banks’ liabilities which AMCON had taken over and consequently laid claim to the assets of NITEL/MTEL. AMCON’s claim had thereby stalled the planned liquidation. As a result of AMCON’s claim, the NCP commissioned an audit of the assets and liabilities of the company to determine what could be sold and what could not be sold. Only time will tell whether the liquidation will solve the problems in NITEL.

— Aug. 18, 2014 @ 01:00 GMT

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