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Tuesday, July 04, 2006

FG disposes NITEL to Transcorp for $750m

Remmy Nweke

FEDERAL Government Monday in Abuja, finally disposed the 75 per cent of the national carrier, the Nigerian Telecommunications Limited (NITEL) along with mobile subsidiary, Mobile Telecommunications Limited (MTel), to Transnational Corporation of Nigeria Plc (Transcorp) for $750 million (N1.1 billion).

According to reports, the sale was facilitated through a negotiated process, but then, bringing to a stop a near-jinx status of selling NITEL.

It would be recalled that over the last five years, the government of Nigeria has tried selling the carrier through the Bureau for Public Enterprises (BPE). Even the efforts to transform NITEL by the management contractors ended up compounding issues as its debt profile kept hiking.

However, the purchase according to Transcorp was made possible through a 1 billion Euro
(about N170 billion) credit secured by the firm from the European Union Development Council at four per cent interest.

Throwing more light on the sale of NITEL, Director-General (DG), BPE, Mrs. Irene Chigbue, said that with disposing of the 75 per cent through Transcorp, all liabilities cum debts would remain with NITEL, “except personnel related issues such as pensions liabilities and costs associated with downsizing which the government will assume."

She also said that the remaining 25 per cent shares are still with government and would soon be disposed too.

Transcorp is led by the Director-General, Nigerian Stock Exchange (NSE), Dr (Mrs) Ndi Okereke-Onyiuke, and made up of some influential business icons in the nation’s capital market, shipping, agriculture, oil and gas and telecommunications.

Mrs Okereke-Onyiuke expressed optimism over the group’s determination to experiment on the ingenuity of their expertise, basically Nigerians.

As said by her, Transcorp will not keep the 75 per cent of NITEL to itself as it will next month (August) start the Initial Public Offer (IPO) so as to enable interested Nigerians invest into Transcorp, thus own part of former NITEL.

She further revealed that the remaining 25 per cent with the government will before November this year be put up for the public to buy by the government, assuring of Transcorp’s support to that effect.

Already, Mrs. Okereke-Onyiuke said that the credit by Transcorp worth N1.1billion will be injected into NITEL in addition to US $1 billion within the next two years to increase NITEL capacity as well as aggressively build out its networks.

Consequently, NITEL was the dominant fixed line operator in the country with operations in all the 36 states and the Federal Capital Territory (FCT) until the deregulation of the industry five years ago.

Equally, its mobile arm, Mtel claims it have achieved about 1 million subscribers base as at December 2005.

With its assets littered nationwide and beyond, NITEL, has shares in several other companies including the Regional African Satellite Organization (RASCOM) 6.91 per cent; International Maritime Satellite Organization (INMARSAT) 0.21 per cent; South Atlantic Telecommunication (SAT3)/West African Submarine Cable Organization (WASC) 7.33 per cent and ICO Global Communications Ltd (I-CO) 0.07 per cent. Its share in International Telecommunication Satellite Organization (INTELSAT) worth 0.60 per cent, was liquidated in 2005 owing to Intelsat’s privatization completion.

Executive Vice Chairman of National Communications Commission (NCC) Dr. Ernest Ndukwe in his remark stated that Nigerians should be happy that NITEL is finally being sold into private hands because "NITEL is a multi-billion telecom outfit that needs only good management to be turned around".

Transcorp, wholly Nigerian owned conglomerate was incorporated in 2004 in response to the need for a mega corporation. Last year, it pulled off a major deal by buying over NICON Hilton Hotel, Abuja which it now renamed Transcorp Hilton.

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