The rather controversial acquisition of Nigeria Telecommunications Limited (NITEL) by Transnational Corporation of Nigeria (Transcorp) came to a sad but inevitable end last week, as the Federal Government revoked the sale of the telecommunications giant, citing breach of contractual terms. Also reversed was sale of M-Tel, the mobile subsidiary of NITEL.
The Minister of State on Information and Communications, Alhaji Ikra Bilbis, said government’s action was based on the failure of Transcorp to meet the conditions under which the telecommunications companies were sold to it in 2006.
A technical board has since been constituted to take charge of affairs before NITEL would be sold again to a new core investor within the next three months.
Regrettable as the revocation of the sale appears, since it gives the impression that Nigeria does not abide with agreements entered into by previous governments, it was really inexorable. Right from the beginning, the acquisition of 51 percent of NITEL by Transcorp had been beset and dogged by controversies, as there were allegations that the corporation was unduly favoured by the Olusegun Obasanjo administration. Transcorp got NITEL for $500 million, when there were other interested parties, who bidded higher. The insinuation was that Transcorp was a pampered bidder because key government officials owned heavy shares in the corporation.
Between 2006 and now, there was a serial breach of the terms on which NITEL was sold to Transcorp. For one, the corporation failed to retain a technical operator since the British Telecom pulled out four months after an initial deal. Again, Transcorp was unable to inject a capital of N8.9 billion within 100 days acquisition as stipulated.
Progressively, the fortunes of NITEL and M-Tel nosedived under Transcorp. The telecom firms which had about 15 percent of the market share, had plunged to about zero percent before the sales revocation last week. Salaries and pensions were owed for many months, and both the workers and retirees of the companies were absolutely miserable. Yet, Transcorp appeared helpless, and was even accused of assets stripping, which was equally a violation of the contractual terms. Matters came to a head and the Federal Government and Transcorp agreed recently to select a new core investor who would have the requisite wherewithal to take over NITEL and M-Tel.
The idea behind the setting up of an international corporation like Transcorp, we admit, is a laudable one, but how the vision was executed under the Obasanjo regime left much to be desired. Now, it appears that the fate suffered by contraptions which are built on faulty foundations when the storms come, has visited Transcorp. It has lost, perhaps, its juiciest asset which was acquired in a whiff of controversy.
We daresay NITEL is very vital to the Nigerian telecommunications industry. Most of the international agreements that affect the sector are domiciled with the establishment. It maintains access and interconnectivity monopoly due to its control of national network of microwave optical fibre cable and satellite transmission. It is, therefore, important that it be sold to an investor who can run it efficiently, keeping faith with stated agreements.
In the past couple of years, NITEL has suffered severe degradation, both in terms of human and infrastructural capacity. Fixed lines in service dropped from 500,000 to about 45,000, and the company is steeped in debt to the tune of about $500 million. Indeed, the value of the establishment may have dropped drastically, while liabilities have soared. It would, therefore, make a lot of sense to sell to an indigenous investor, who would run it with patriotic zeal and ideals. It is commendable that the Director General of the Bureau for Public Enterprises, Dr. Christopher Anyanwu, has said due consideration will be given to the bid by the second National Operator, Globacom Limited, alongside others.
It is equally gratifying that BPE has set a maximum time of three months for the resale of NITEL. Lessons should be learnt from the experience with Transcorp, the earlier Pentascope deal in 2002, which was also a monumental blunder, and the failed bid by Egypt’s Orascom Telecoms. This time, all the loopholes should be plugged, and Nigerians given a tidy, transparent process that conforms with best practices.
