Posted by By Chijama Ogbu on
For the third time, the effort to sell the Nigerian Telecommunications Limited has encountered a hiccup. When the Bureau of Public Enterprises and the Transnational Corporation...
Why NITEL is difficult to sell
For the third time, the effort to sell the Nigerian Telecommunications Limited has encountered a hiccup. When the Bureau of Public Enterprises and the Transnational Corporation arrived at the $750million price for NITEL after a series of negotiations, not a few Nigerians thought that finally a buyer had been found for the telecoms enterprise. The thought was further underscored by the enthusiasm with which the Transcorp team received the deal.
But the tune has since changed: Transcorp could not pay. It is now making a case for new payment terms, and the Bureau of Public Enterprises said it had referred the matter to the National Council on Privatisation. So, what looked like a smooth deal has entered a muddy zone.
The question is, what is the problem that makes it a difficult to sell NITEL? While it is difficult to volunteer an answer to this, my hypothesis is that there is a cabal in the Federal Government working assiduously to frustrate any good bargain for NITEL. Their game plan is to present the enterprise as a bad product so that they will go behind the scene to grab it.
Let us look at what had transpired in the two latest attempts to privatise NITEL. When the BPE called for expressions of interest in the penultimate attempt, about 22 firms expressed interest. And many of them were serious investors willing to put money in NITEL. But when everything was like working out: the BPE came up with a requirement that technical partners to the bidding investors should take up a minimum of 20 per cent equity stake in the consortium for their bids to be sustained. And I was informed they had only 21 days to do that. Of course, it is obvious to anybody knowledgeable on corporate procedures, that it is not a realistic demand. No serious company can rush into investments running into hundreds of millions of dollars without board approval.
And they had 21 days within which to do that. There is no serious company anywhere in the world that can do that even in 60 days. So, it was a catch. It was a whole process programmed to disqualify other contenders and pave the way for Orascom, which the cabal was promoting. So, when Orascom emerged, I saw it in the hight of my hypothesis. They deliberately removed all the credible people. So, it was not an accident that Orascom emerged. Because Orascom emerged with little-known company called Newtel. Up till now people have not asked the questions: Who was Newtel's technical partner? How did they get to that stage?
So, in a very discreet manoeuvre, they were able to push up Orascom as the preferred bidder with a bid of $256million, less than the 25 per cent of the bid by International Investors London Limited. My other hypothesis is that the same group that brought Pentascope to Nigeria were the same group who brought Orascom and they are the same group that are implanting roadblocks to deny Transcorp the opportunity to buy NITEL.
You notice that all this while, nobody has been privy to the reserve price - the minimum price acceptable - for NITEL. Remember that when GSM licences were auctioned we all knew what the reserve price was - $100million. And the man who conducted proceeding got $286million. We knew it was transparent. They were announcing it minute by minute on radio and television. Everybody knew when anybody was dropping off.
The question people are asking is, in a country where you have had a successful auction, how come you are not applying the same system here. What is the difference in this company and those GSM licences. If the preferred bidder can't pay the reserve bidder will take, in that order. If you have a transparent process, there is no way number one, two or three cannot pay.
Third hypothesis: The whole manoeuvre actually began with the giving out of NITEL to a management contractor. It was a beclouded bid process that threw up Pentascope. For instance, it was clear why the consortium that included British Telekom and Lucent Technologies were adjudged inferior to the faceless Pentascope that came to ruin NITEL.
Then you come to the latest bid. My guess is that they deliberately selected firms that could easily be knocked off one after the other on certain criteria. The mistake most people make is that Transcorp was the anointed candidate for NITEL. Yes, that is true on the part of President Olusegun Obasanjo who wants Transcorp because of its credential as a credible indigenous investor. But the cabal actually, from my investigation, was rooting for Etisalat. In other words, the same group that promoted the bid of Pentascope, promoted that of Orascom and later Etisalat.
Their permutation here was that MTN would be disqualified because of the NCC requirement that an operator will not have two licences in the market, Telecoms SA because the government is also skeptical about giving licence to another South African firm, Investcom because it is now owned by MTN. That will leave the space for Etisalat and African Networks, which was put there as a decoy. Remember that FT Networks which said it was ready to pay $602million for 51 per cent equity stake in NITEL, was only admitted on President Obasanjo's instruction.
What took the wind out of their sail was Obasanjo's inclination towards Transcorp. And unwilling to let go, they worked out an arrangement that ensured the partnership of Transcorp and Etisalat. The emerging facts show that they are already working at Etisalat emerging as a senior partner at a 38:37 ratio in its favour, since Etisalat is providing the cash.
We have very smart citizens in this country. And we need to be very watchful so that we are not stripped of our national assets cheaply by smart alecs.