The revocation of the sale of NITEL last week by the federal government did not come as a surprise. Since the sale of the telecoms firm to Transnational Corporation Plc (Transcorp) in 2006, the fortunes of the company had nose dived further. The government cited breaches of agreement as the reasons for the revocation.
Among the breaches of share sale purchase agreement (SSPA) include the non-infusion of fund into NITEL as promised by Transcorp, the non-payment of debts owed other networks in interconnect fees, and the belief that Transcorp will be in a position to asset strip the firm if the revocation was not carried out before the expiration of the three years period after which Transcorp will not be required to consult the Bureau of Public Enterprises (BPE) if it wanted to sell any of NITEL’s assets.
The government also mentioned that this is one of the privatized companies it is considering revocation. In effect, we should expect more revocations. However, the revocation of NITEL sale and any that might follow should not give the slightest excuse that these firms are better off in public hands. Firms such as NITEL have failed under public control and they will fail again if their genuine, serious and pragmatic privatization is not accelaerated.
When in 2006 Transnational Corporation Plc (Transcorp) paid $500million to acquire 51 percent of NITEL, the world had expected to see some record breaking mega deals that could make NITEL and M-TEL become world class telecommunications companies. Those expectations had been misplaced. The government was not sure what it wanted, as it appears it wanted to justify that NITEL was worth much, rather than ensuring that NITEL was sold to a company that was prepared to revive it. From the start, it was obvious that Transcorp did not have the required capacity to achieve this aim.
Though the revocation has been done in black and white, many issues and principles are begging for forthright considerations on the part of both government and Transcorp. The $500million pooled by five Nigerian banks as loan facility for Transcorp has not been repaid, though the government has promised bonds. Staff of NITEL are being owed 11 months salaries. Transcorp has already sold some assets belonging to NITEL and yet no cash has been put into reviving it. Making NITEL and M-TEL profitable again has been made more difficult as their market share dropped from 15 percent at time of sale to an insignificant share of 0.03 percent today.
The first requirement for an effective sale of NITEL and MTEL is to separate property assets of the firm from the telecoms assets of the firm. The government should hold the property assets and all liabilities while it seeks to sell the telecoms licence and the telecoms assets left of the firm. This should be followed by a thorough asset audit to ascertain the true and current value of these assets. In doing this, the business infrastructure of NITEL will be separated from its property letting the new core investor pay attention to business rather than property. The new core investor must be known to have ready cash to inject into revamping the moribund telecommunications conglomerate before NITEL business is handed over to them. Government should pay the outstanding wages owed staff as already promised by the presidency so that their cooperation can be guaranteed in the new dispensation.
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All intrigues aside, government must justify this revocation by showing a clear strategy and time table to show how it plans to reposition NITEL and M-TEL in the nearest future. This is to point the ship of privatization in a new direction different from our usual experience of revocations without any action plans thereafter. NITEL can still come alive if things are done aright. The proposed technical board to oversee NITEL till the successful conclusion of another privatization bid to find a new core investor must be directed to focus on reviving the business life of NITEL and not on the lip-licking fantasies of its property. A further rot of NITEL is not in the interest of all stakeholders. Therefore, a speedy and calculative strategy must be engineered without any delay.
