From the ashes of the fallen telecommunications behemoth, NITEL and its late kid brother MTEL, has arisen a world-class brand that promises to take telecommunications services to the next level in Nigeria come March this year. Welcome to the world of ntel, the brainchild of NATCOM, the corporate vehicle that acquired the telecommunications assets of the NITEL and MTEL under a guided liquidation process supervised by the Bureau of Public Enterprises.
At a recent public hearing on the acquisition of NITEL/MTEL by the House Committee on Telecommunications in Abuja, Olatunde Ayeni, chairman of NATCOM, disclosed to the honourable committee members that his company’s first “mass market offering will comprise high-speed mobile broadband services over a brand new 4G/LTE network providing coverage to suburban communities in Lagos, Abuja and Port-Harcourt”.
In addition, NATCOM will offer high-definition voice and high-speed data services over direct fibre connections (freshly laid by NATCOM) to enterprise customers where locations are adjacent to this new metro fibre network. A phase 1 market launch of this network is scheduled for March this year.
For NITEL/MTEL and, indeed, for NATCOM, to say that the journey to the present destination has been tortuous is to put it mildly. For an entity with a record of five failed privatization attempts between 2001 and 2011, NITEL’s misfortune has been multi-dimensional and truly troubling.
Having come to terms with the fact that this former sole national telecommunications provider could end up as mere scrap unworthy of any investor’s fleeting attention, the National Council on Privatization in February 2012 approved the privatization of NITEL/MTEL through a guided liquidation process. This strategy, proposed 12 years after the first in the series of earlier failed five attempts of privatization, was adopted in recognition of the huge liabilities of these companies, recorded at over N350 billion, a monumental burden the federal government was not prepared to bear.
Ayeni painstakingly took the committee through the guided liquidation process, an explanation that was in agreement with those of the BPE and the liquidator appointed for the two critically ailing entities. Earlier in April 2015, at the official NITEL/MTEL handover ceremony to NATCOM, BPE had disclosed that the process commenced with the selection of Otunba Senbore as liquidator for NITEL/MTEL in a very competitive process. The NCP approved the appointment on November 11, 2013. After a review of the procurement process, a certificate of No Objection was issued by the Bureau of Public Procurement (BPP) on 17 December, 2013.
According to the chairman of NATCOM, following the liquidator’s advertisement in local and international publications in June 2014, calling for Expression of Interests (EoIs) from prospective bidders, NATCOM threw its hat in the ring.
Said Ayeni: “NATCOM’s submission clarified that its interest covered the intention to bid for ALL and ANY COMBINATION OF NITEL and MTEL ASSETS, Specifically: (a) The combined business, assets and licences of NITEL and MTEL; (b) The business, assets and licences of NITEL and MTEL separately; (c) Percentage interest held in SAT-3 Consortium; (d) Identifiable assets capable of generating viable business units.”
NATCOM was one of the companies prequalified for the bid, with the liquidator releasing a Request for Proposal (RFP) to the company. In response to the liquidator’s invitation to submit a technical and financial bid for the companies, NATCOM’s full submission was made to the liquidators and BPE on 7 November, 2014. The submission was accompanied by the Bid Bond, in the amount of US$10m, in accordance with the liquidator’s RFP.
On completion of the evaluation of bids submission by the liquidators and BPE, NATCOM got an invitation to be present at the opening of its financial bid at a public ceremony which held 3 December, 2014. Officials of BPE, NCP, EFCC and Ministry of Communications Technology attended the event. There, NATCOM offered to buy the businesses and assets of NITEL/MTEL for US$221m. But the offered price was below the liquidator’s reserve price. NATCOM was given a short break to consult and revise the bid price. NATCOM resumed the session with an offer of US$252.25m.
The NATCOM boss explained that what informed the decision to settle for that figure was his group’s resolve not to bid higher that the value of Orascom’s 2005 bid of US$256m.
“This is because, one, NITEL/MTEL was at that time (when Orascom bided) fully operational, with revenue; two, Nigeria’s tele-density was less than 20 percent, and three, the portfolio for sale included core and non-core assets the latter of which has since been completely stripped along with a substantial part of the former,” he further explained.
A telecommunications analyst, Otunba Biodun Ajiboye, agrees with the NATCOM boss: “If you factor in the fact that by 2005 when ORASCOM offered N256m NITEL/MTEL was jointly a vibrant entity with a lot of core and non-core assets, and then add the fact that the companies’ equipment had become obsolete and valueless by 2014, you will agree that at US$251m, the transaction weighed heavily in favour of Nigeria. It was a good transaction for the country.”
As stipulated by the liquidators, not only did NATCOM pay 30 percent of the bid price within 14 days of the approval, it also met the 90 days deadline set for the payment of the balance of 70 percent. But even then, the tortuous journey to the acquisition of NITEL/MTEL was far from over.
The liquidator insisted that the decline in the value of naira from N168 to N197 to the dollar had created a payment shortfall which NATCOM must cough out. It was a tidy sum of N6.6bn. NATCOM’s compliance with the additional payment instruction by the liquidator brought the deal to a close with acquisition of NITEL/MTEL by NATCOM.
“We therefore state categorically, and with all humility, that NATCOM faithfully followed the rules laid down by NITEL/MTEL’s liquidator and BPE in all aspects of its participation in the guided liquidation process. In addition, NATCOM believes that the guided liquidation process, as executed by the liquidator and supervised by the BPE, followed the best practices, globally, for privatization and complied fully with due process,” Ayeni told the committee members.
And following the handover of NITEL/MTEL businesses and assets to NATCOM, the company has continued to play by the rules. The chairman noted that “NATCOM, via its well-advanced business start-up and network roll-out activities, is faithfully executing its understanding to BPE, as defined in the Sale and Purchase Agreement’s Post-Acquisition plan, to establish and sustain a new telecommunications operator and to deploy the assets acquired wholly and exclusively within the enterprise”.
In line with that agreement, NATCOM has since recruited a team of world-class executives and senior managers, led by Kamal Abbas, a former top official of Ericson; it has executed a comprehensive technical sites survey and audit of its towers and masts across Nigeria. It has completed the digital mapping of NITEL duct network in Lagos State; contracted the services of Fort Knox Guards, a security services company with nationwide presence, to provide static and patrol-based security and access control services at NATCOM’s locations and commissioned ongoing refurbishments to derelict buildings so that they may be reused for business purposes.
Since NATCOM took over NITEL/MTEL, it has expended about US$1bn in getting the moribund former national telco back to work. About 100 Nigerians have been employed, and hundreds more will be engaged, directly or indirectly, by NATCOM in the months ahead.
It is in light of the above that Ayeni submitted to the committee that “the objective of the NCP, which was to execute the full and final privatization of NITEL/MTEL and in doing so to resolve these companies’ liabilities of some N350bn without recourse to the federal government’s coffers, was successfully achieved in full and should not be reversed or undermined in any way”.
Indeed, after the presentation, one went away with the conclusion that the committee members and other citizens who witnessed the hearing are in agreement with Ayeni’s parting shot: “That NATCOM should be commended and encouraged in its efforts towards reviving NITEL/MTEL’s dormant assets and creating a new Nigerian-owned telecommunications company of which the nation can be justifiably proud.” He couldn’t have put it better.
