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NITEL's liabilities rise to N130bn
Oluyinka Akintunde, Abuja
The Bureau of Public Entperises said on Thursday that the liabilities of the Nigeria Telecommunications Limited rose to N130billion as at October 2005, up from N73.8billion in 2003.
The agency said in a statement in Abuja that the twice-botched privatisation of the First National Telecoms carrier would now proceed through negotiated sale rather than public bidding.
The sale is expected to be concluded in June.
The Head of Public Communication, BPE, Mr. Chigbo Anichebe said pre-tax income of NITEL declined from N15billion in 2002 to N1.5billion by September 2005, while total revenue dropped from N40.9billion in 2002 to N22.8billion in 2005.
Anichebe admitted that NITEL was failing "technologically" with its share of the mobile market dropping from 11 per cent in 2002 to five per cent in 2005.
He said the BPE had dropped the competitive bidding option, which has produced two failed attempts to sell NITEL, in 2002 and 2005, respectively.
The privatisation agency said it would conclude a negotiated sale for the company with a preferred investor before the end of June 2006.
He said another round of competitive bidding would take about 12 months or longer during which NITEL's value would continue to decline as liabilities/debts increase, service/market share decrease, and investors grow cautious as Nigeria's election approaches.
He explained that the negotiated sale option met all BPE's original transaction objectives based on the same criteria used to evaluate prospective investors during the competitive bidding phase.
"Thirdly, since NITEL's fixed link is used by other providers, NITEL technological constraints compromise their reliability and inhibit roll out of new capacity and services," Anichebe noted.
He listed the steps to be taken in the negotiated sale to include;
• Shortlist screened based on pre-qualification criteria: minimum of $0.5million shareholder capital, fixed and mobile telephony experience in two countries with two million aggregate subscriber base, and a 20 per cent equity investment by a technical partner/telecommunications operator;
• Preferred investor identified from a short list;
• Following negotiation of Share Purchase and Shareholder Agreements with preferred investor, preferred investor submits a binding financial proposal; among others.
• Federal Government opens and reviews binding financial proposal, and if acceptable, concludes transaction by signing the agreements with the preferred investor;
• If the offer is not acceptable, then all the short listed prospective investors receive the same transaction documents and allowed to make their counter offers; and
• Federal Government reviews all offers received, makes its decision.
It would be recalled that the Federal Government had in January 2006 cancelled the sale of NITEL to Orascom due to its low bid price, which was lower than the $285million paid by NITEL to acquire a digital mobile licence for M-Tel from the Nigerian Communications Commission in February 2001.
As at January 31, 2006, about 20 prospective bidders, including Telkom of South Africa, Transnational Corporation (Transcorp), Global Fleet Oil and Gas and Global Link of China, had indicated interest to acquire the 51 per cent government interest in NITEL.
Orascom Telecom and Newtel International had emerged as the final bidders for NITEL, after paying a non-refundable bid bond of $20million (about N2.6billion) each totaling $40million (about N5.2billion) for the telecommunication firm.
Orascom, however, on December 29, 2005 was named as the winner for the bid for NITEL as it staked $256.53million in the second round of the bidding exercise, compared to the $127.5million it offered in the first round of the bidding exercise.
Its rival bidder, Newtel International, which offered $154.96million in the first round of the bidding, refused to turn up for the second round of the exercise with no reason.
THE PUNCH, Friday, May 05, 2006
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