Thursday, January 05, 2006

Undercurrents of selling NITEL

Features of the week:

As Nigerians await the decision of the National Council on Privatization (NCP) on the last week’s purported sale of NITEL to Orascom, the auction has been described as adding insult to an injury, writes REMMY NWEKE.

“THe world has moved from the reliance on natural resources to a new knowledge-based foundation, where the wealth and powers of a nation are directly dependent on the strength of their information technology”, according to the Commissioner for Science and Technology in Akwa-Ibom State, Dr. Linus Asuquo, in a speech at the launch of the Victor Attah Digital Opportunity Center (VADOC) a year ago.

He stressed that successful economies and economic development “in this fast moving world faced with globalisation, depends on knowledge and technology”; generated and disseminated accordingly.

This idea seems to have received the blessing of the vice chairman, West African Information Technology Professionals Association (WAITPA), and chief executive of Connect Technologies, Mr. Chris Uwaje, who opined that lack of database is the bane of Nigeria’s economic quagmire, while lamenting the economic downturn of the country and inability of the country to optimize its human capacity due to lack of vision by the few, who probably find themselves making policies for the government.

Knowledge economy
Defined by the Development Gateway (DG) as a situation where knowledge is more important as a product than it has been, with another school saying, ‘codified knowledge’ is now more significant as a component of economic relations and finally, some other school of thought argues that knowledge economy rests on changes that Information and Communication Technologies (ICT) have brought to the world.

A database, therefore, is a collection of information stored in a computer in a systematic way, such that a computer programme could consult it to answer questions, electronically, in accordance with

Whereas information in line with ‘WordNet’, a lexical database for the English language coordinated by the Cognitive Science Laboratory, Princeton University New Jersey, United States, led by Prof. George Miller, defined it thus: “a message received and understood; data, as a collection of facts from which conclusions may be drawn; “statistical data” and knowledge acquired through study or experience or instruction seen in communication theory as a numerical measure of the uncertainty of an outcome; “the signal contained thousands of bits of information” and finally as a formal accusation of a crime.

51 per cent stake
Drivable conclusion in the aforementioned definition is that information made available by the Bureau of Public Enterprises (BPE) and the National Council on Privatization (NCP) should be accurate and current for people and especially potential investors in the privatization of over 50 corporations left in its care to take a good business decision.

Unfortunately, the reverse is the case, especially in the bid to sell the Nigerian Telecommunications Limited (NITEL’s) 51 per cent stake by the Federal Government (FG) on behalf of the Nigerian people.

Outdated information
Investigations by Champion Infotel revealed that most of the information provided for investors date back to December 31, 2002, which on itself is outrageous. Also discovered was that all the current listing on the BPE website,, do not have current financial summaries. But the bureau went on to state with guts a note of caution, which reads “This ‘Investors’ guide’ is based on information provided by the enterprises (since 2002) and other sources. However, it is not a substitute for due diligence into the enterprises which must be undertaken by any prospective investor”.

First impression, they say matters and could win or mar a relationship, hence the question now is, where would one get the first information as an investor so as to be attracted by the so-called ‘due diligence,’ as to invest into an enterprise that the funeral literally was witnessed four years ago, for an investment in 2006.

Therefore, it was very clear that from the outset, somebody was undermining the sell of these enterprises listed for privatization and the first accused is BPE, followed by those who probably are managing these corporations in relation with the privatisation. It also showed that what is left of BPE is what Malam El-Rufai left the place with.

Potential investors
As a potential investor, there is no magic in optimizing the price tag for such entity, let alone NITEL which customers have since taken flight to the Private Telecommunication Operators’ (PTOs) services.

Another instance is that even the hullabaloos exhibited by the management contractors, Pentascope International of Netherlands; it was not on record for a serious investor to even assess first hand information from BPE’s website, wherever they may be coming from at this time of economic reform.

This was not the only finding of the investigations as the press briefing session of the web indicated that it was last updated 2002 as well as the financial summary.

The under current tones here, is that, either these entities have since seized to exist, and that the federal government was merely shopping for somebody to take their corpses to the morgue for deposit or something yet undisclosed.

For instance, the weekly press briefings were held May 14, 2002.doc 8/24/2003 11:12:09 PM, April 16, 2002.doc 8/24/2003 11:12:16 PM, 21 May 2002.doc 8/24/2003 11:12:22 PM, 22nd July 2003.doc 3/16/2004 4:58:30 AM, May 28, 2002.doc 8/24/2003 11:12:28 PM, July 29 2003.doc 3/16/2004 4:59:34 AM, April 2, 2002.doc 8/24/2003 11:12:36 PM, April 30, 2002.doc 8/24/2003 11:12:42 PM, and June 4, 2002.doc 8/24/2003 11:12:52 PM, as stated by

Another instance from NITEL aspect was that only a 21-word letter was used to add something to those in charge as an update, in terms of stating thus: “As at June 2004, NITEL had an installed fixed telephone network of 720,000 lines, of which approximately 500,000 had been activated”. And even with this, those who packaged NITEL thought they have done enough update to attract an international investor.

No wonder it was being speculated that they have once again sold NITEL to themselves as had previously been the case of privatization in this country. This is not withstanding the fact that it was purportedly under-priced by the Egyptian telecom giant, Orascom Consortium after playing a fast one by buying stakes in the supposed two other keen bidders in NITEL deal, namely the NewTel and Hutchison Telecom.

Indications therefore emerge that there is serious undercurrent to under price at all cost. Although NITEL may have ‘rot’ but not to the extent that Orascom becomes the sole interested bidder.

Disposing NITEL at all cost
Though the comments by the former BPE boss and current chairman of Federal Capital Territory Development Authority (FCTDA), Mallam Nasir El-Rufai’s fear of NITEL nose diving like the former Nigerian Airways is not far fetched, some Nigerians and telecom industry players may differ with him that it must be sold at all cost.

His argument is that since inception of NITEL, government has invested over $7 billion in the organization and for its bidding to decline from $1.317 billion to $256.5 million is bizarre and may continue to decline in the coming year.

President General, Trade Union Congress (TUC), Mrs. Peace Obiageli Obiajulu, while reacting to the ridiculous bid of $256.5 million, which is less than the $285 million for the Global System for Mobile communications (GSM) license in 2001, said that full autonomy would give NITEL another life line as the best option.

Emphasising that the price was not enough to buy the mobile arm of NITEL, Mtel, she explained that full autonomy would solve the problem of the corporation under a team of management without interference from any quarter. She said, TUC expected that the last bid should have surpassed that of the London-based Investors International Limited (IIL) in 2001.

NITEL’s brief
NITEL is Nigeria’s national fixed line and mobile telecommunications company, owned 100 per cent by Federal Government. It was incorporated as a limited liability company in December 1984, which was a product of the merger between the telecommunications arm of the defunct Posts and Telecommunications Department (P&T) of the Ministry of Communications, and Nigerian External Communications Limited (NET). NITEL commenced operations on January 1, 1985 and as at June 2004, claims to have installed fixed telephone network of about 720,000 lines, with approximated 500,000 activated.

December jinx
The bid for NITEL has a history of December mishap which in the last five years has been consistent and awful, having failed lately by the under pricing by Orascom Consortium. It follows that the assuming sealed lip on the outright auction result until after consultation between BPE and NCP due to the $256.5 million bidded by the company, may not be different from El-Rufai’s position.

ITREALMS recollects that the first failure to privatize NITEL was February 11, 2002 by the withdrawal of the London-based Investors International Limited (IIL) on its inability to pay up its 90 per cent after bidding N1.317 billion and paying $131.7 million which was 10 per cent of the initial bid.

Other reasons given then was that the sudden demise of the custodian of justice in the country and Minister of Justice, Chief Bola Ige, who was murdered, on December 23, 2001, did not make room for investment environment, among others. Efforts was made to take NITEL to the Stock Exchange which did not materialize, then came the Dutch management contractors, Pentascope International, which left NITEL nearer to the grave than its reference to increase its roll out targets of fixed lines by 600,000 and mobile, by one million. This is against 500,000 fixed and 118,000 mobile lines respectively at the time of the deal.

This contract was stalled soon after December 2004, due to inexplicable reasons and mismanagement resulting in overhead expenses incurred by the Pentascope managers, and by January of 2005, it was made official.

Now, this Orascom drama also happened in December 2005, hence it seems NITEL has a date with December of every year. This was after being incorporated in December 1984.

Way forward

Proffering the way forward for NITEL, President, Nigeria Internet Group (NIG), Mr. Lanre Ajayi said that while it is important that deregulation of the telecoms industry is brought to a conclusion by privatising NITEL, “I do not think it is right to sell it at a give away price. Doing so will be counter-productive. The objective of massive rollout which the sale is meant to achieve may not be achieved. The buyer may simply become complacent after recouping the very low price at which the company was bought with some profit,” he said.

However, he pointed out that a way forward in this circumstance would be to unbundle NITEL into many components, which may be sold separately.

“I am positive that the SAT3 cable will attract good pricing from one of the existing operators and the mobile service (MTEL) will attract good attention from international operators who may be interested in just the mobile service” he opined.

For the chief executive of Telecom Answers Associates, Mr. Titi Omo-Ettu, obviously unhappy with the situation, said he has years ago turned his back on anything that have to do with the sale of NITEL and BPE, until they finish with the entity called Nigeria.

He painted a picture of why the some of the bidders left when they discovered the travail in the presidency culminating in their probable withdrawal completely. Describing the state of the current NITEL as post mortem which may not be useful after all.

No comments: