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NITEL: 8 Year on, still in privatisation web

In 2003 before Pentascope took over, NITEL generated and collected N51.43 billion as revenue in one year from about 555,055 connected lines. After 23 months…

In 2003 before Pentascope took over, NITEL generated and collected N51.43 billion as revenue in one year from about 555,055 connected lines. After 23 months of Pentascope take over, the connected lines dropped to 440,000 with a debt profile of over N40 billion which eventually led to the revocation of the sale to Pentascope. In 2005, Orascom, an Egyptian Telecoms giant, failed to buy the company because their $250 million was said to be below the reserved price.

The take over of NITEL by Transnational Corporation (TRANSCORP) in 2006, was celebrated with fanfare. The $500 million deal promised to turn the fortunes of the company around. The Chairman of TRANSCORP, Dr. Ndidi Okereke-Onyuike, promised then that TRANSCORP will inject $1 billion dollars to revive it. In order for them to achieve this lofty objective, 7500 staff of NITEL were sacked to pave way for the so called prudent management because they claimed that NITEL was over bloated. Instead of improving the fortunes of NITEL, three years after TRANSCORP takeover; the company is almost on its knees. Before the latest revocation of sale to TRANSCORP, government had criticised them for failing to live up to their promise. John Odey, former Minister of Information and Communication, last year said;

“Since TRANSCROP took over the company in 2006, the fortunes of Nitel/M-tel have been nose- diving despite public commitment made by TRANSCORP to within two years, inject about $1 billion dollars to rehabilitate and acquire of new equipment and technology. To date, no fund has been injected.”The minister also alluded to the fact that TRANSCORP has  not been able to raise money from the capital market due to poor subscription of its IPO which was 36.2 percent subscribed.Odey also said that TRANSCORP failed to implement schedule 3 of the share sale purchase agreement which led to the pulling out of their technical partner, British Telecom(BT). The former PDP spokesman lamented that, “In addition to sacking thousands of staff, TRANSCORP has consistently failed to make regular payment of salaries to the remaining 4000 NITEL staff”.

Condition of NITEL today

As at June 1, 2009, when government finally revoked the sale of NITEL to TRANSCORP, the company was indebted to the tune of N17 billion naira.  When they took over, NITEL connected line was 400,000. Three years after, it has dropped to less than 100,000. Working lines was 296, 000. It has dropped to 5,000.M-TEL had about 1.3 million lines when TRANSCORP took over. As at today, the lines stand at less than 100, 000. The 250,000 CDMA lines that was at 90 percent completion before TRANSCORP took over, has not been completed. There were 249 (out of the original 284) active exchanges in the NITEL network nationwide at the time TRANSCORP took over. Today, less than 60 of them are working. Many of them shut down due to power problem.

The transmission link nationwide optic fibre network and the Micro-wave (radio) link have broken down. Today, you can’t call any location (e.g. Abuja-Kaduna) on a land line.

Is unbundling the answer?

After experimenting with NITEL for eight years, BPE is now mulling the unbundling option without taking the blame for its collapse. The BPE failed to do a sound technical and financial verification of both the Pentascope and TRANSCORP before they sold NITEL to them. If they finally agree to unbundle NITEL, it will be worthwhile to ascertain the capacity of interested investors to avoid the mistake of the past.

The BPE in its wisdom, thinks that breaking NITEL into five different components is the best way out. NITEL comprises M-tel, the mobile telecommunication wing, the South Atlantic Terminal (SAT-3), Analogue Cellular Phone and the CDMA units.BPE spokesman, Chibo Anichebe, says that each of the operating units already has a separate licence that would need to be reviewed.” The unbundling is just a plan. When the board is inaugurated, the plan will be presented to them by the privatisation advisers. If they accept it, they will then take it to the National Council on Privatisation for approval”.

Telecoms experts think that NITEL is now a hard sell because with 67 million subscribers out of a population of 140 million in Nigeria, the telecoms’ market appears largely taken over. It would be very difficult for new investors in view of NITEL problems to break into the market.

They argue that the super high way and first national carrier that NITEL used to enjoy is no longer there. This is because GLO will soon launch its Trans-Atlantic Submarine Cable Project called GLO One while another company is also launching Main One soon.

Experts also contend that unbundling could be very dicey because M-tel switches and equipment are co-located with NITEL. So prospective buyers of MTEL will have to buy only GSM licence while it rolls out a new network from scratch.

From all indications, the plight of the nation’s first National Telecom Carrier still hangs in the balance and only time will tell if the once thriving company can ever bounce back to life under whatever guise and arrangement.