February 11, 2008
ABUJA, Feb 12 (Reuters) - Nigeria's 2006 privatisation of Nitel has failed to turn around the moribund telecoms firm and the government wants a new core investor to take control, the official News Agency of Nigeria (NAN) has reported.
The government sold 51 percent of Nitel to home-grown conglomerate Transcorp for $500 million, but the new owners have lurched from one crisis to the next since they took over and have been unable to raise enough cash to fix Nitel's problems. "Incessant changes and disagreements between board members and top management in Transcorp are a major factor leading to instability in strategy and programme implementation," said a document stating the government's position, according to NAN. The document was agreed after a meeting in December between the telecoms ministry, the privatisation agency, the telecoms regulator and Transcorp, NAN said in a report late on Monday.
Nitel's infrastructure deteriorated during decades of corrupt and inefficient state management, to the point that its lines are constantly malfunctioning, its billing is erratic and staff go for months without being paid.
As things stand, the government retains 49 percent of Nitel. The document quoted by NAN states that it wants Transcorp to sell 27 percent of Nitel to a new investor, which would buy a further 24 percent from the government to take control.
But NAN quoted the chairwoman of Transcorp as saying that under privatisation rules Transcorp was not allowed to change the ownership structure until 2009. PAST TROUBLES
"We are only suggesting some percentage of equity participation by some of the global telecommunications companies that have shown interest in Nitel," said Transcorp chairwoman Ndi Okereke-Onyiuke.
This was an apparent reference to an agreement announced in August whereby U.S. firm Cisco, British group Cable & Wireless and South Africa's Dimension Data were supposed to provide technical assistance to Transcorp. Few details of the terms have been made public.
Past experience suggests Nigeria would struggle to find new, credible investors in Nitel. The government started trying to sell the firm in 2001 and went through a series of near-misses and fiascos until it finally sold it to Transcorp in 2006.
In late 2005, it came close to selling Nitel to Egypt's Orascom Telecom, which analysts said had experience of countries with infrastructure problems and would have been well-placed to revive Nitel's fortunes. But Nigeria rejected the $256.5 million offered by Orascom as too low.
The sale of Nitel to Transcorp, billed as one of the flagship measures of an IMF-backed economic reform programme launched by then President Olusegun Obasanjo, generated allegations of cronyism.
Transcorp was set up with active support from Obasanjo by a group of his business allies. During the final months of Obasanjo's tenure, it snapped up state assets including a lucrative Hilton hotel in Abuja and a stake in an oil refinery. Since Obasanjo stepped down in May 2007, Transcorp's fortunes have flagged. In August, it announced that investors had bought only 36 percent of its initial public offer (IPO) which had been intended to raise money to pay back what Transcorp borrowed to buy Nitel and to invest in the firm. The new government also took back the oil refinery, saying the privatisation had been improperly conducted.
(Writing by Estelle Shirbon, editing by Elizabeth Fullerton)
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