Trends & Forecasts

Purchasers show interest in Nitel privatisation

Bids for Nigeria's state-run telecoms company Nitel are being received from both local and international firms. There appears to be a sticking-point in that the Nigerian Government will give priority to those bidding for the entire Nitel enterprise although the key asset and therefore target is the MTEL mobile division. 

Reuters has recently reported that the Government of Nigeria has received expressions of interest from 13 potential investors in the sale of at least 75% of Nitel, the former state telecoms monopoly which it has been trying to privatise for several years. Among the 13 are the Nigerian arm of South Africa's MTN, Etisalat, India's MTNL, and a local amalgam of Telefonica and the Nigerian firm Globacom. 

The scene is complicated and pressurised. There is the time factor whereby President Umaru Yar'Adua ordered Nitel's new board to privatise the company within 60 days, although this latter takes its place in the line of deadlines which have come and gone for the sale. What is worse is the subscriber question where Nitel's fixed lines have fallen to less than 100,000 from five times that figure in 2001, while MTEL subscribers have dropped to a few thousand.  

New investors in Nitel have been hard to find. This is not surprising as the state of the infrastructure is just one problem; billing which falls behind schedule or never happens and a workforce sometimes unpaid for months at a time do nothing to enhance performance.  

The Bureau for Public Enterprises (BPE) has the responsibility of evaluating the interest being shown by each company. BPE faces the challenge of working for Africa's most populous nation and one of the world's fastest growing mobile markets - 7 million new subscribers signed up in 4Q08 alone, thus overtaking South Africa to become the biggest on the continent. 

Then there is the role of Nitel's MTEL mobile unit in the bidding. Sell MTEL at the right price and Intel becomes more attractive as a whole. What tarnishes the attractiveness of Nitel is the condition of its fixed line infrastructure. Any bidder will have to reconcile two these conflicting financial aspects. BPE has in turn made its own specification more complicated will give preference to those who wish to purchase not just Nitel's fixed lines and MTEL but also components of the South Atlantic Terminal underwater cable (SAT-3). 

* Nigeria ended Nitel's monopoly in 2001 and tried to sell the operator the same year. However, preferred bidders failed to pay the US$1.3 billion price tag by the deadline, leaving it in state hands. Local conglomerate Transcorp later bought a majority stake but the government took back control in June, citing a lack of investment and unpaid debts. Nigeria did come close to selling Nitel in late 2005 to Egypt's Orascom Telecom the Nigerian Government rejected the US$257 million offer as too low. 

** Developing Telecoms acknowledges Reuters as the source of information for this report.



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