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Wednesday, July 16, 2008

Transcorp: Repositioning NITEL for new core investor

Analysis:

Last week’s interactive session between the management of Transcorp Plc and employees of the Nigerian Telecommunications Limited (NITEL) in Abuja, is a good omen for all stakeholders, mostly for the potential core investor, reports REMMY NWEKE.

At the beginning of this year, 2008, a lot of controversies surrounded the existences of the first National Carrier, the Nigerian Telecommunications Limited (NITEL) due to the reported outcome of the meeting held between the management of NITEL current owners, the Transnational Corporation Plc (Transcorp) and the Federal Government through the Ministry of Information and Communications, last December.

Bone of contention then was what the government described as lapses on the path of Transcorp to transform the moribund telecom company, over two years after it took charge the management of NITEL, having emerged the ‘preferred bidder’ as pronounced by the immediate past government led by Chief Olusegun Obasanjo.

Then came the industrial action by the employees of NITEL over unpaid salaries, which lasted for eight days, despite claims by Transcorp officials that certain amount of money was paid into the staff salaried account for the settlement of about five months’ arrears.

The effect of the strike was so much on the industry that the likes of Lagos-based pay-TV company, HiTV had to cry out, and apologize to its subscribers for irregular services while appealing for understanding as efforts were being made to resolve the week-long strike by NITEL employees.

This was due to the fact striking workers had shut down major switches and transmission lines, including the SAT-3, in protest of the unpaid salaries.

HiTV is one of the companies that depend on NITEL, especially for its transmission infrastructure, to provide services.

Managing director and chief executive officer, Mr. Toyin Subair said, “HiTV had to contend with long delays in activating subscribers because its activation process is linked to NITEL’s SAT-3 cable infrastructure, which links Nigeria to the rest of the world.”

The activation of subscriber’s accounts, he noted, had taken less than a minute before then, but because of the strike, activation took close up to two hours because the process begins in Lagos and goes through the international system, which is linked to SAT 3.

HiTV was not alone, even as some telecom operators also lamented over the effect of the strike while it lasted. This goes to show the vital role NITEL, if well positioned and explored could contribute meaningfully to the growth of telecom development in the country.

However, the good news has been that the management of Transcorp and NITEL employees seem to have put everything that happened, preceding the strike behind them and as a way of injecting a new lease of life into the organization, especially to be able to attract the relevant investors to carry on the kind of re-engineering that has since taken off in the organization.

With the discovery of some accounting discrepancies in NITEL, it was imminent that the board of NITEL needs refocusing, which would begin with the relieving board members of their positions, essentially starting from the key ones.

So, to many industry observers, the recent announcement of the sack of NITEL board chairman, Chief Ferdinand Alabraba, did not come as a surprise.

Transcorp sources, confirmed that he was dismissed, stating that the step was part of the interim measures by majority stake owners to make over the declining fortunes of NITEL, just as other personnel changes will be announced soon.

“The stepping down of erstwhile chairman of the NITEL board, Chief Ferdinand Alabraba, is a key to the success of the current measures in changing the face of the company,” one source was reportedly quoted as saying.

But Transcorp management insisted that the decision to change NITEL’s board leadership was meant to return it to profitability, before a proposed sell of some of its equity to new core investors is finalized in the fourth quarter.

This, ITRealms Online gathered, was approved at a Transcorp board meeting two weeks earlier to the announcement.

Another relative issue that came to the fore in recent times now, was the rumour making the round that Transnational Corporation Plc was trying to dispose NITEL in pieces, mostly by offering its sub-marine cable otherwise known as SAT-3 to some companies.

But reiterating the resolve of the Transcorp to hand over NITEL intact to a new competent core investor, said that SAT 3, a NITEL asset, is not for sale.

This position was elucidated by the Head, Corporate Communications, Mr. Adedayo Ojo, noted that after a great deal has been invested into SAT 3 in order for it to function properly, a plan to revive the company does not involve SAT 3’s sale.

With regard to the ongoing restructuring, Ojo noted that the majority of NITEL’s staff are happy with Transcorp’s bid to restore the ailing telecom to a profitable position, because: “It is right for a new set of management to come on board to truly revive the company.”

Ojo expressed confidence that NITEL employees are in the right frame of mind, an indication that the restructuring will not lead to any form of industrial dispute.

He added that employees have also expressed their satisfaction with rehabilitation work in the Federal Capital Territory, Enugu, Benin and Port Harcourt, which resulted in the active lines working in Abuja.

“This is an indication that Transcorp is very serious with its investments,” Ojo said, commending the employees of NITEL for accepting the transformation programmes without any form of rancour.

And in raising the hope further, the Group Managing Director, Transcorp, Mr. Tom Iseghohi, announced last Tuesday that it will provide US$100 million (about N11.7 billion) into the telco’s transformation over the next four months.

The investment, he said, is one of the interim transformation plans for NITEL before the sale of some equity to a new core investor.

Despite Transcorp’s financial commitment to the project, NITEL, he pointed out, that the telco would not be completely out of the woods, stressing however, that the move is meant to enable the company attract the kind of core investor envisaged by Transcorp and the federal government.

Emphasizing that one of the key areas that needed a quick fix is the backbone and transmission infrastructure, the current plan expected to start yielding results on or before four months time.

Describing as a top priority, the need to boost employees’ morale, Iseghohi said it’s an area that many NITEL employees would like to be addressed urgently.

“Welcome to new NITEL, a NITEL where every staff is promptly paid. It is a new company where the quality of service matters and everybody works towards it. This move will return NITEL to its rightful place in the Nigerian telecom industry,” Iseghohi said.

Whereas Iseghohi restated Transcorp’s resolve to end NITEL’s monthly revenue leakage to the tune of about US$14.6 million, NITEL general manager in charge of audit, Mr. Abdulkarim Momoh, said it is necessary to probe the company’s investment in continental submarine cable SAT-3.

Momoh also pointed out that although SAT-3 has the capacity to generate funds to run NITEL, only an insignificant part of the capacity is being utilized.

As industry watchers hope for the implementation of the promises, eventually to turn things around for NITEL, especially following the proposed injection of new lease of life with the $100m, it is expected that NITEL workers themselves should turn a new leaf, because it takes two to tangle.


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