Posted by By Okoh Aihe, Communications Editor on
A FEW days after the announcement of a $256 million deal offer for NITEL, Vanguard can reveal authoritatively that the deal has been cancelled by President Olusegun Obasanjo who was apparently embarrassed that such a national heritage was going for peanuts.
LAGOS—A FEW days after the announcement of a $256 million deal offer for NITEL, Vanguard can reveal authoritatively that the deal has been cancelled by President Olusegun Obasanjo who was apparently embarrassed that such a national heritage was going for peanuts.
Orascom of Egypt last Thursday made the offer after Newtel consortium backed out from reviewing it price upwards. But when the deal was announced, people carried long faces and experienced disappointment, rather than cheers.
As it is now, the deal is never going to go through. Presidency sources informed Vanguard yesterday that President Obasanjo had to step in to ensure the process does no go any further because of under-valuation.
When Vanguard contacted the Bureau for Public Enterprises (BPE) yesterday, an official would not disclose the reserved price which the source said would be known only to the President and the vice president nor would he say anything about the total worth of NITEL.
But this may give a little inkling, and it is the lamentation of high profile industry enthusiast who over the weekend told Vanguard that the licence alone to Mtel, the mobile arm of NITEL, was $285 million. Since then, however, and after false starts, Mtel now has about 1.2 million lines. His conjecture was that Mtel alone is worth more than the amount the buyers are offering.
The link to Mtel deserves an explanation. Although NITEL was the one up for grabs, whoever was buying it would have to take Mtel as a bundled product. During the GSM options, the Nigerian Communications Commission (NCC) thought it wise to keep a reserved licence for the incumbent operator. Apart from helping to strengthen its power to compete, it would also enable it to make some money and attract investment. Such treatment would be given to any national operator. That explains the coming of Globacom whose most prominent face has remained, Glo, the mobile arm.
Unfortunately, business has been conducted in such a way that Mtel has not been able to impact so advantageously on NITEL.
But when BPE officials came to sensitise the Lagos media over a month ago, very little was said of Mtel. The attention was on NITEL, the liabilities that weigh the value down but admitting that it was a flagship transaction that they hoped to conclude before the end of year. But whoever was buying would have to take over most of those liabilities.
The officials were the only ones hopeful that they would succeed. Most people were very skeptical and this was just at a time when the role of the ministry wasn’t very clear over the lucrative SAT-3 that was eventually withdrawn from the package. The officials had said the Nigerian telecom industry was now clearly defined, and that investors had more confidence about the market, which is why the transaction would attract major world players to scramble for Nitel.
They were for a time, and those in the race included: Huawei/Jacuc Consortium of China, Telkom Consortium of South Africa, Orascom Consortium of Egypt, Celtel of Belgium, Newtel Consortium of South Korea and MTN consortium of South Africa. But one by one, once SAT-3 became a contentious issue, others withdrew from the race, leaving only Orascum and Newtel. The seriousness of Orascom became clear a few days to the deal when it invested about $1.3 billion in Hutchison Telecom. The point that became very clear was that Orascom may not command the kind of cash to enable it conclude two major deals at the same time.
Last week it became very clear that BPE may not have the capacity to sell NITEL. In two earlier bids, it had failed. First was the case of Investors International of London Limited (IILL) which could not raise the bid price of $1.137 billion. But the case of Pentascope, the management contractors which came after IILL, was more worrisome. At the end of the deal, the country was in the hole to the tune of over N18 billion.
President Obsanjo’s action last weekend may have been taken to stem the tide of embarrassments but what happens to NITEL on the long run remains a crucial question.
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