OLA AWONIYI, Abuja | Thursday
THE Nigerian government on Wednesday sold a $1,3-billion 51% majority stake in its telecoms firm Nitel to a consortium led by a subsidiary of Portugal Telecom.
Sealing Africa’s largest ever privatisation, Vice President Atiku Abubakar and government officials signed a series of documents with the Portuguese-led group, International Investors of London (IIL).
Under the agreement, a first 10% of the sum — just over $130-million — must be paid to the government within 10 working days, by December 12.
The remainder, 1,17-billion dollars, must be paid by 90 days, in late February.
The deal, which could still be contested by the losing bidders, a consortium of Swedish and Korean firms, is a landmark in the government’s privatisation programme and marks a major step in the economic reforms in Nigeria demanded by the World Bank and International Monetary Fund (IMF).
After a bidding process commended by the World Bank as open and transparent, the signing ceremony had to be put off last week because of the Portuguese firm’s reluctance to be designated the new Nitel operator.
Reports last week that the Portuguese firm was moving into a risky African market were said to have impacted negatively on the company’s stock price, though company officials denied this here.
In the papers signed Wednesday, the Portuguese firm Technologia de Communications (TDC) was designated as taking part in a ”technical and managerial partnership” with the new company.
But Nigerian officials said both sides agreed this meant TDC is the operator and said this was signed and confirmed by the company. ”TDC is the operator,” Nasir el-Rufai, head of the government privatisation agency, the BPE, told AFP.
”They have certain responsibilities to discharge in the case of Nitel and there are certain risks they have to take and there are penalties if they don’t meet those targets and they accepted,” he said.
Nitel, set up decades ago, has for years provided an abysmal level of service to Nigerian business and residential users and has deservedly earned itself a reputation as one of the world’s worst telecoms companies.
With only around 400 000-500 000 lines working at any one time in a country of 120 million people, Nigeria currently has one of the lowest tele-densities on the planet.
Those fortunate, or unfortunate, enough to have a Nitel phone have often suffered problems of fraud carried out on their lines, had calls diverted and suffered regular cutting of the line.
Under the deal signed on Wednesday, the new owners will have to manage the existing Nitel network and roll out 1,4-million new lines over five years, as well as extending a new mobile network to 1,5-million new subscribers over the same period.
One of the key assets of the company is the licence it was given in January to operate a digital mobile network, operating alongside two new foreign-based companies which started operations in August.
To calm fears of the over-staffed and corruption ridden company, the government said the new managers would not be able to sack any staff unless for criminal activity.
From when the final payment is received, the company, which as a state-run enterprise could not be sued, will be liable to court action in Nigeria. – Sapa-AFP