The Raging Controversy in NITEL’s Sale
 3rd NOV 2006

When the sale of 75 per cent share of NITEL and its mobile subsidiary, Mtel to Trans National Corporation (Transcorp) was announced in July by the Bureau of Public Enterprises (BPE), it appeared an end had come to the traumatic journey of finding the right man for Nigeria’s telecommunication beautiful bride.

The Nitel Tower

Indeed, $750 million for which the stake was sold was a better thing compared to the offers presented by Orascom and other companies involved in the previous unsuccessful attempts to sell it off. However, it may not be time yet for the BPE and Transcorp to seek repose .In the first instance, the House of Representatives welcomed a motion by one of its members, Alhaji Nasiru Dantiye, to probe the sale which was achieved through a negotiated arrangement.

Specifically, Transcorp, believed to be 100 per cent indigenous, was asked to pay the first tranche of $500 million within seven days after reaching agreement and the remaining $250 million to be paid in 60 days after. Transcorp was only able to add $75 million after the expiration of 60 days, leaving $175million outstanding to effectively take over the 75 per cent of NITEL stake .The rules thus appeared to have been deliberately relaxed to favour Transcorp, drawing lots of criticisms from some quarters of the country.

Explaining the rationale behind the method adopted to sell the telecom giant, the Bureau of Public Enterprises said that it opted for a negotiated sale of Nigerian Telecommunications Limited (NITEL) as a result of its depreciating value. It said NITEL value declined daily as its financial condition continued to erode with liabilities increasing and revenue declining.

According to a statement by Mr Chigbo Anichebe, Head of BPE's Public Communications Department, "in 2003, for instance, NITEL liabilities amounted to N73.8B. In 2005, as of October, liabilities had increased to approximately N130B and growing. He reasoned that it was better to close the transaction while it could still negotiate from a position of strength as wasting time on the sale process would not be to the advantage of Nigeria, more so as the previous bidders did not offer as much as Transcorp.

"The negotiated sale method meets all BPE’s original transaction objectives based on the same criteria used to evaluate prospective investors during the competitive bidding phase: namely, to attract a world class strategic investor with a proven capacity in both fixed and mobile communications; to maximize the transaction value, and to reverse those telecommunications constraints impeding Nigeria’s economic growth", Mr Anichebe explained.

Since the Bureau of Public Enterprises (BPE) concluded the negotiated sale of NITEL with the preferred investor, a consortium led by the Trans National Corporation of Nigeria Plc ‘Transcorp Consortium’ on July 3, 2006, there has been a tremendous amount of public commentary on the transaction.

What followed this was a barrage of criticisms. In one of his opinions in the Guardian, Dr Reuben Abati described the negotiated sale arrangement as a euphemism for favouritism and desperation. Questioning the place of transparency and due process, he said the government lacked the courage to go through the fourth process of sale, suggesting a re-examination of the process.

Professor Sola Adeyeye, the House of reps member who seconded the motion, was of the opinion that the procedure adopted in selling NITEL’S 75 per cent stake lacks accountability and transparency. Alhaji Dantiye said the value of the First National Carrier which has 80 per cent of fixed lines in Nigeria was underestimated. The controversy also presented the platform for the Vice President Atiku Abubakar to allege that NITEL was one of the 10 public firms sold at the behest of his boss, President Olusegun Obasanjo, without the approval of the National Privatization Council (NPC).

The petition against Mr. President by Lagos lawyer and foremost Human Rights Activist, Chief Gani Fawehinmi (SAN) on the ground that President is in “unlawfully” a shareholder of Transcorp can also be said to be one of the reactions trailing the activities of the company which included the acquisition of NITEL.

On his part, Mr. Femi Falana another foremost legal practitioner and social/human rights activist, “the process adopted by the government in selling NITEL, which is one of the most commanding heights of the country was unconstitutional and inequitable. Some groups had attempted to buy it. Because of their failure to meet stipulations, it was cancelled.

“In the case of Transcorp, it failed to pay up before deadline, and the government was forced to negotiate with them. To that extent, the government has been inconsistent, practicing discrimination. I’m convinced that NITEL will later be taken back, I warn, therefore, that it is a risk to buy such national asset”.

Back to Top
Post Your Feedback