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Wednesday, February 20, 2008

Managing NITEL as concession for Interstella?

LAST quarter, and precisely in the month of November 2007, a Federal High Court sitting in the Aba, Abia State gave judgment in favour of Interstella Communications Limited, over the loses caused by the Nigerian Telecommunications Plc (NiTEL) management and subsequently awarded damages in excess of N14 billion of InterStella.

The awards was as a result of NITEL’s refusal and failure to interconnect the company’s network since 2002, in spite of the fact that NITEL had collected several millions of Naira from the company for 36 switching E1s, 9 transmission E1s and one international half STM1 circuit on SAT-3 undersea cable.

Primarily, the news of the awards was shocking to a across session of the country and forced various agencies of the government to reconsider their arrogant attitudes towards members of the public and private business entities that they are supposed to service but who always treated them as colonized subjects.

An aspect of the judgment against NITEL based on its indebtedness to the like of Interstella, which often being missed amidst attention by industry analysts is that with effect from the date of that judgment, given the award of 25 per cent annual interest on the debt sums of N14 billion and $12,150,000.00, the sums inadvertently earn an interest of N9,589,041.00 and $8,321.92 every 24 hours.

Since that award, in excess of N14bn in favour of InterStella, documents have come to the public domains exposing how NITEL committed the management blunders that gave rise to the award.

It is unthinkable that NITEL collected money for SAT-3 from Interstella, but failed to pay its dues to the SAT-3 cable administrators in South Africa, consequent upon which it could not provide the services.

But what actually sends wave of surprises is that in spite of this fact, NITEL made no effort to dialogue or communicate with the company, thereby forcing the company to reactivate a lawsuit earlier filed against the organisation.

This, industry observers said is very unfortunate and indicates what happens when a business arose out of government patronage or outright public ownership. It also goes to explain the behaviours and attitudes that cost NITEL its former position as the nation’s prime telephony services provider.

Most Nigerians may not be surprised by these findings, as they seemed contended with NICON hotel, oil and gas concessions and other politically facilitated deals of then President Olusegun Obasanjo era.

Therefore, there was no effort to change the government cum civil service management mindset in NITEL and replace it with serious private sector way of thinking. It also rationalizes why nobody in NITEL took the lawsuits serious. After all, why should an imperial government entity worry over the rights of a small entity like the plaintiffs, Interstella Communications Limited, and the Courts, which hitherto are no more than a tolerated nuisance?

Now, the NITEL’s self-inflicted wounds should be no one’s concern, yet some Nigerians and analysts to be precise would say that there is need to worry, even as others may insist the organization should be left to stew in its own urine.

But unfortunately, about 50 per cent of the company still belongs to the Nigerian public, although the exact percentage of NITEL acquired by Transcorp from the Obasanjo government remain a mystery. Thus, these factors create a legitimate condition for public concern over what is being done with NITEL.

With likely demise awaiting NITEL as its woes become a mountain of debt profile, it is necessary that government cum public shares in the telco is substantially public, hence it must be considered, protected and reflected in the actions taken to cure the entity. Thereby bringing to the fore the issue of its debts, particularly to Interstella Communications Limited, which is currently its single highest creditor, despite the revert of its sale by the Federal Government (FG) at the weekend.

And given the debt sum (N14bn) and the interests that are accruing to it on daily basis, some industry analysts are opting for a realistic way out of the woods by way of brokering an ownership structure whereby NITEL’s debts to the company could be converted to equity share while the company, Interstella takes over the management of NITEL on behalf of the government and other equity holders.

Although the aforementioned option may not just go down well with some industry observers, yet it seems to be the only way out of the crisis that has bedevilled NITEL and at least, for a given time pending when NITEL comes out of its drawing bath of debts, more so now it has gone back to the Bureau for Public Enterprise (BPE) for a fresh option.

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