Nitel: Going, going, gone?
By BISI OLALEYE
Tuesday, March 06, 2012
After a protracted privatization process of the first National operator, the moribound Nigeria Telecommunication Plc, NITEL that dragged for ten years in which the federal government made several attempts to sell but failed, industry stakeholders say that the liquidation of NITEL may be the next logical step to disposing of various assets. BISI OLALEYE reports
Last week when news filtered in that Nigeria’s First National Operator, Nigerian Telecommunications Ltd, NITEL will be involved in a guided liquidation. It met with mixed reactions from industry stakeholders owing to the fact that after several long years of trying to sell off the entity ,which had become ‘an abiku’, (a child, which no one wants) , government suddenly woke up to hands down the information.
Spokesman for the Bureau of Public Enterprises, BPE, Chukwuma Nwokoh, explained that the council has approved “guided liquidation” for NITEL and M-TEL “in view of the huge liabilities of both companies.”
The committee, he said, recommended the guided liquidation of both companies and that “there was no viable financial alternative presented by the management of NITEL and M-TEL.”
Both country’s state-owned fixed-line telecoms provider, and its mobile arm M-TEL are now to go into liquidation after the companies amassed huge debts, Nigeria’s Bureau of Public Enterprises said on Thursday.
Liquidation
Liquidation is usually the last stage of a workout plan or bankruptcy proceeding for a company. It occurs when it has been determined that a company cannot continue on as a viable entity and it is believed that there exists more value in the assets of the company than in the company as a going concern.
Occasionally a company’s assets will be liquidated when the owner decides to quit, not because he has gone bankrupt but because he doesn’t want to go through the effort and trouble of finding a buyer. Industry stakeholders noted that the liquidation is coming at the right time after government failed to secure viable buyer of the debt-laden operators.
It would be recalled that government has been trying to sell both companies since 2006. In 2009, their operations were taken over by a government-appointed technical committee, which was mandated to privatize the firms.
The Nigerian government in June 2009 blocked the sale of NITEL and M-TEL to Transnational Corp. of Nigeria PLC, alleging that Transcorp failed to adhere to the terms of the sale. In 2006, Transcorp acquired 51 percent of NITEL and M-TEL, with the Nigerian government holding the remaining 49 percent . But the government added that Transcorp was unable to properly fund the companies’ operations.
The former Executive Vice Chairman, Nigerian Communications Commission, Ernest Ndukwe noted that he was one of the stakeholders who believe that, to get NITEL privatisation process right, a strategic decision must first be made to unbundle the telecoms entity.
He said: “First of all, I personally believe that NITEL should not be privatised in whole but in part. I have said this so many years ago up to seven years ago . That we should sell M-TEL separately and sell NITEL separately. If we try that, it would be successful and it would be quick and it would be finished”.
Assets
NITEL was formed in 1985 after the merger of Nigerian External Telecommunications Ltd, responsible for external telecommunications, common carrier services and the telecommunications arm of the Department of Posts and Telecommunications. A mixture of analogue and digital technologies were used when Prof Buba G. Bajoga was Managing Director.
Prior to the financial bid NITEL was known for its fixed-line incumbency in the country, but its fixed-line unit is dilapidated to the extent that some have claimed it should be abandoned altogether. However, the company does have other assets, which include one of only two universal service licences in Nigeria, allowing it to provide wholesale backbone access, and international gateway services.
According to the Managing Director, Informatics, Mr. Lanre Ajayi, the guided liquidation should not have been the best approach but because of failed attempts to sell the entity.
“It is coming at the right time after several agitation from stakeholders. It is best because further delay will lead to further devaluation and degeneration of resources and properties. I want to believe it is the right move considering the circumstances .With this liquidation , government will sell the various assets to anybody who has the money to buy whichever one suitable for his company”.
Although , the privatisation process of NITEL was terminated by the BPE for the fifth time following the inability of Omen International, the reserve bidder to revalidate its $956m bid for NITEL. The then preferred bidder, New Generation had earlier failed to pay a deposit on its $2.5bn bid.
It would be recalled that financial bids for the privatisation of NITEL opened on 16 February 2010, but only six of the 14 pre-qualified consortia met the February 5 deadline for the submission of technical and financial proposals: Brymedia; AF21/Spectrum consortium; MTN Nigeria; Globacom Nigeria; Omen International; and New Generation Telecommunications.
The federal government began seeking a buyer for a minimum 75 per cent of NITEL and 100 per cent of its mobile unit M-Tel in July 2009 after previous majority shareholder Transcorp divested its stake earlier in the year. Prospective investors were invited to acquire either at least 75 per cent equity in the entire NITEL conglomerate or a stake in one or several of its components, including M-Tel, submarine fibre-optic cable division SAT-3, the company’s domestic fixed line infrastructure, its national fibre-optic transmission backbone, and its Coded Division Multiple Access(CDMA) network. South Africa’s MTN was among the bidders, but only for a stake in the SAT-3 underwater cable, for which it offered USD25 million.
President, Association of Telecommunications Companies of Nigeria, ATCON, Mr Titi Omo-Ettu said: “My earlier call for an auction of the First National Operator (FNO) license which NITEL is holding while it is wound down to mean exactly what Government has now done. Honestly, I do not know because it seems to me that ‘guided liquidation’ or any liquidation at all, is a technical matter and I am not versed in the subject so I do not want to let that vocabulary stow into my thought process.
“I have since 2009 switched off all thoughts about NITEL when I considered that the final end came for the Company. I went into the exercise of valuating the License that NITEL was holding and came up with a figure which hovered around $2.2billion. I did not keep it to myself. I called a press conference and explained the explainable part of the valuation and how it would guide us in knowing what the country stood to gain, or loose, if such estimation was required to guide a decision”. Adding that ‘guided liquidation’ is a process of resting the corporate name called NITEL and doing our best to recoup whatever we can from the whole project called NITEL.
“ I think there is really no other choice than to do just that. Except that it is coming three years late. It may then mean that my position in 2009 synchs with what has now been announced as reported in newspapers.The only contribution I have now is to advise whoever is implementing the guided liquidation that the company they are liquidating is still in custody of our First National Operator License”, he said.
