Business, Featured
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After several failed efforts, the Bureau of Public Enterprises has finally sold Nigerian Telecommunication and Nigeria Mobile Telecommunication to NATCOM Consortium
| By Anayo Ezugwu | Dec. 22, 2014 @ 01:00 GMT |
AT last, the federal government will be handing over the Nigerian Telecommunications PLC, NITEL, and the Nigerian Mobile Telecommunication, MTEL, to NATCOM consortium which emerged as the preferred bidder for the acquisition of the assets of the companies. The consortium won the bid recently after its revised bid price of $252 million from the initial $221 million was accepted by the government through the Bureau of Public Enterprises, BPE.
At the public opening of the financial bid for the acquisition of the of the assets of NITEL and MTEL under the guided liquidation exercise, Benjamin Dikki, director general, Bureau of Public Enterprise, BPE, said that the reform and liberalisation of the Nigerian telecommunications sector made tremendous stride with the successful privatisation of the NITEL and the MTEL. He expressed hope that the highest bidder would not only meet the deadline for payment of the purchase consideration, but would deploy the required resources to rehabilitate and grow the companies.
Earlier, Omobola Johnson, minister of communications technology, said: “The privatisation of NITEL and MTEL is the final step in the reform of the telecoms sector. It is our fervent hope that today’s event would lead to the final emergence of a qualified bidder with the requisite technical expertise and financial resources to transform the two companies in line with the vision of government,” she said.
Before the opening of the bid, Atedo Peterside, chairman, technical committee, National Council on Privatisation, NCP, explained that the law provided that each bidder shall furnish, as part of its proposal a bid bond in the form of a Bank Guarantee of a Letter of Credit in the sum of $10 million. The bid bond must be enclosed with the technical proposal and the Bank Guarantee of Letter of Credit shall be from a reputable bank acceptable to BPE and the liquidator and be valid for 120 days from the deadline for submission of proposals. The provision must be made for extension of the term of the bid bond if the validity period is extended.
According to Peterside, after a review of the history of the privatisation of NITEL and MTEL, the National Council on Privatisation, NCP, at its meeting of February 27, 2012, approved the privatisation of both telecom companies through guided liquidation. The strategy was adopted by the council after due consideration of other options and in the light of the previous failed attempts to privatise NITEL and MTEL through strategic core investor sale and negotiated sale strategies and the huge liabilities of creditors to the tune of over N300 billion.
But this is not the first time the federal government 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 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 bid was below the price of NITEL. The takeover of NITEL by Transcorp in 2006 was celebrated in the country but the excitement was short-lived after the $500 million deal failed to turn around the fortunes of the company. Also, the last attempt to sell the company to New Generation Telecommunication Consortium of China at the price of 2.5 billion dollars for 75 per cent stake in NITEL/MTEL was terminated due to failure of the Chinese consortium to pay the bid price.
Thereafter, every move to save the moribund company has failed. In February, 2012, the NCP approved a guided liquidation as the strategy 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 if the latest privatisation would be able to save NITEL and MTEL this time around.
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Tags: AMCON Assets Management Company of Nigeria Atedo Peterside Bank Guarantee of Letter of Credit Benjamin Dikki MTEL NATCOM Consortium National Council on Privatisation NCP New Generation Telecommunication Consortium of China Nigerian Mobile Telecommunication Nigerian Telecommunications PLC NITEL NITEL/MTEL Omobola Johnson Orascom Pentascope Transcorp
