Wednesday, June 10, 2009

NITEL’s acquisition:NCC may stop Glo, MTN

Like the Biblical verse which says that it will be easier for a Camel to pass through the eye of a needle ..., signs have emerged that it may be extremely difficult for Globacom Limited and MTN Nigeria to join the bid for core investors being touted to take over the remains of the first national carrier, the Nigerian Telecommunications Plc (NITEL) and its mobile arm, MTel.

Just as the apex industry regulator, Nigerian Communications Commission (NCC) may place an ‘embargo’ on those two; forbidding them from the proposed latest NITEL bid based on regulatory clauses.

Whoever wins the bid is expected to take over the 51 equity share of the moribund telecom compaany, which may be increased to 71, according the advertorial to that effect by the Bureau for Public Enterprises (BPE) among the five speculated contenders as revealed at the weekend.

Noteworthy is that the Presidency last week, Monday, announced the revocation of the sale of NITEL/MTel to Transcorp Plc, alleging its failure to honour the terms of the sales agreement entered into in 2006, otherwise known as the Shares Sales Purchase Agreement (SSPA).

The revocation was made public after the National Council on Privatisation (NCP) meeting presided over by Vice President Goodluck Jonathan at the Presidential Villa, Abuja, and read to the media by the Minister of State on Communications, Alhaji Ikra Bilbis.

As said by him, the Council equally accused Transcorp of depreciating the value of the two firms, accumulating heavy debts and non-payment of staff salaries for over 11 months running, exiting of British Telecommunications (BT) as the technical partners, which was a condition precedent in the SSPA, as well as the failure of Transcorp to inject N8.9 billion cash into NITEL within 100 days of its takeover, pay interconnectivity debt totaling about N17bn, and maintain NITEL/MTel as an ongoing concern.

Also, last Tuesday, a seven-man technical management board led by the Permanent Secretary, Ministry of Information and Communications, Dr. Abubakar Mohammed, was inaugurated.

Affirming that regulation may disallow both Glo and MTN to bid for NITEL, a professor of telecommunications at the American University of Nigeria, Yola, Dr. Augustine Odinma, said that it would be abysmally wrong for either of the two to think about it, considering the licensing agreement they entered into ab initio.

“It would be a slap in the faces of Nigerians to think that GLO is considering biding for NITEL because it was created to checkmate NITEL excesses; that is why it was called the second national carrier,” he declared.

On the other hand, he said, it would be disastrous to sell NITEL to MTN because that would create a monopoly that could have far reaching consequences.

Recalling his submission in 2005 to the House Committee on Communications, as then technical consultant investigating the circumstances surrounding the appointment of Pentascope B.V as Management Consultant, which suggested that NITEL should not be sold given the two failed attempt before Transcorp came to the scene.

“Because I always believed the core investor’s sale approach was a mismatch for the likes of NITEL, and I suggested at the time that a good CEO who can grow NITEL should be sought and allowed to run NITEL as a private company,” he said.

NITEL, he said, should be registered with the stock exchange and the government must allow the CEO to run NITEL without interference, while NITEL will gradually be sold off through Initial Public Offer (IPO), pointing out that a copy of the report was made available to the presidency at that time.

Although, Globacom is currently the Second National Operator (SNO) with a mobile subsidiary, Glo Mobile and almost everything NITEL has including its own cable due to land Lagos before August this year as against the SAT-3, while MTN Nigeria is the leading Global System for Mobile communications (GSM) operator in the country, according to industry statistics and has invested heavily in infrastructure nationwide to assume its present position.

Whereas Globacom got its avalanche of licenses in 2002 and commenced operation in August 2003, MTN was part of the historic Digital Mobile Licensing that took place in 2001, which saw to the emergence of Econet now Zain and NITEL/MTel as licensees.

Despite the likelihood of the obstacles before these two telcos embarking on such amorphous venture, some members of the lower house of the National Assembly, who were in Lagos, last week, were quoted as backing the plan, which some industry observers described as laughable and unrealistic, given the obvious hiccups, saying they should have known better.

For a telecommunications engineer and social communicator, Mr. Titi Omo-Ettu, the proposal may be as good as dead, because he did not foresee the regulator permitting such attempt in the first instance.

Responding to ITRealms Online inquest on the matter, Omo-Ettu, who also is the chief executive officer, Telecom Answers Associates, wondered how such a dream would manifest.

“How can? Will regulation permit,” he retorted.
Equally for Mr. Chidi Oparauwakwe, a telecom unionist, the best bet should be for the government to run the telecom institution as seen in other parts of the world, especially for national security reasons, in close collaboration with a reputed international technical partner.

“But if selling it is the best option, either (Glo or MTN) is good,” he said, warning however that the mobile arm of NITEL, would eventually suffer as any of the aforementioned who clinches the NITEL licenses may not like to continue with the MTel structure, thereby leading to job disengagement.

He pointed out that if the Federal Government managed institution is handled well, instead of disengagement, more jobs will be created as progress is recorded. He stressed “a fresh company would attract new employment, just like Etisalat did and by developing its own structure the Nigerian market would be better for it.”

For the chief executive officer, Phase3 Telecom, Mr. Stanley Jegede, the process if and when successful will enhance service provision with broad-based orientation and better choice for the end users in the sector.

Another labour leader in NITEL workforce, Comrade Elias Kazzah, told ITRealms Online that he has no qualms over who takes over the core investor position of the company, as long as the entity complies with the laid down rules and regulations.

“Provided they meet the requirement, I have no technical reason to object,” he said.
Apart from the already mentioned outlines, it is anti-competition for an SNO to think of acquiring the first national operator, let alone bidding for it and does not make any business sense.

For MTN, industry analysts, said that it will be another slap on the face of Nigeria, considering that the firm is a South African company, noting that the support Nigeria rendered to ensure South African independence, has not changed the attitude of the owners of MTN in their dealing with Nigerians, mostly its employees.

They equally argued that it may lead to another technological apartheid on the continent, even as embarking on such expedition for Globacom, will, no doubt, amount to a waste of scarce resources at this era of economic meltdown.

Yet, some insisted that Globacom has not fulfilled its mandate as SNO, expressing skepticism over the proposed sale, and alleged that those offering NITEL for sale, invariably have already-made buyers waiting, like in the case of failed Transnational Corporation Plc (Transcorp), where it was ‘preferred bidder.’

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