Peace
Last week, a road show party was organized in London. The purpose was to look for a new core of investor for NITEL. Early this year, precisely in February, the government had met with the management of Transcorp and the agreement reached was that a new core investor be found for NITEL. The meeting was significant to the extent that both the government and Transcorp realized that the earlier privisation has not worked.
However, in the last couple of months, the crisis facing NITEL and its mobile sister, MTEL has escalated in a number of dimensions. First, staff salaries have not been paid for about nine months, and most of them have since left their post. The company has piled up debts while unable to meet the aspirations of its customers and the nation. Tom Iseghohi, the group managing director of the parent company, Transcorp, has been a long time guest of the EFCC, alongside two of his lieutenants. The value of NITEL has virtually vanished, and the nation is now looking for an alternative to key services provided by NITEL.
NITEL’s sale has been jinxed since 2001. After the initial attempts to sell the company to International London Limited (IIL) and Orascom collapsed in 2001 and 2005, respectively, NITEL was sold to Transcorp in 2006. Transcorp held promise because it was a Nigerian firm and managed to secure British Telecoms as technical partners. But it has all gone horribly bad. Going forward, it is important to understand why the process to revive NITEL failed, otherwise the same mistakes will be repeated.
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It will be very easy for the government to think that the complete collapse of NITEL was due to the alleged impropriety of Transcorp management. Did that help in the non revival of NITEL? Yes it did, but only to the extent that the firm’s management was not sincere about the management of the fund at its disposal, as some of the revelations in this paper last week has shown. Now, I first heard Iseghohi speak at the 2007 Nigerian Economic Summit (NES), and I must confess, I thought he was superb, as he gave a brilliant understanding of our development efforts. Currently, I struggle reconciling that person with what I can term Transcorp consultancy gate that has been going on in the firm since 2007 when he became the GMD of Transcorp. But, despite the revelations, I still hold the view that in 2006, Transcorp was sincere about reviving NITEL.
And I am convinced in my mind that government still has the NITEL problems because it was not sure what it wanted. NITEL was not worth anything near the $500 million plus Transcorp paid. The same Transcorp was expected to meet liabilities such as interconnectivity fees and then put up fund to revive the almost dead company. And the new owners are not allowed to sell NITEL properties until after three years of ownership. It was this punitive measures that drove away all experienced telecoms firms. I am sure Transcorp failed in its primary due diligence and it is paying heavily for it. This does not in anyway suggest that Transcorp has been best behaved, which I have covered above.
In this context, the inability to raise fund required for the resuscitation of NITEL and MTEL through either debt or equity is the most important single reason why Transcorp could not revive the telecoms company. To add value, significant investment was required. The requirement was for working capital to meet urgent outstanding expenses needed for its operations. Indeed, NITEL owed over N10 billion in interconnectivity fees alone. Consequently, Transcorp’s plan for NITEL after acquisition required the injection of funds believed to be about N10 billion.
Though other problems arose, such as the exit of technical operator (British Telecom), the struggle to make salary payments, the sale of assets to cover costs, and a degeneration in the relationship between Transcorp, 51 percent owner of NITEL /MTEL, and the government, which owns remainder of the shares of the company, it is the inability to raise working capital that led to these other problems.
To revive NITEL, government should first and foremost divorce NITEL, the telecoms company, from NITEL, the real estate firm. The FG should keep the real estate and thus plan to sell the telecoms firm. Second, the liabilities on NITEL’s books, including debt owed to staff as salaries, backlog of pension payments, and other emoluments should be borne by the government. The debt owed other operators in interconnectivity fees, and the ones owed banks should also be borne by the government.
The sale of NITEL and MTEL can then be made only on the basis of who has a realistic plan, the will, ability, technical know how, revival plan, and the fund needed. Then I do not mind if the firm is sold for N1.00 Perhaps it is not worth more than that.
