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Nigeria revokes Nitel sale

Page last updated at Tuesday, June 2, 2009 6:06 AM // Leave Your Comment

nitelThe government of Nigeria has taken over the country’s former national telecoms provider, Nitel from buyers Transcorp. The government says its action is due to lack of investment and unpaid debts in the three years since local company Transcorp bought Nitel, reports reaching ghanabusinessnews.com has said.

Ghanabusinessnews.com carried a story May 20, 2009 in which it suggested that the Nigerian government was contemplating a revocation of the sale of Nitel to Transcorp.

In the events leading to the take-over, group managing director of Transcorp, Tom Iseghohi was arrested following mounting allegations of impropriety against him. Other senior executives were also arrested following allegations of corruption.

Transcorp is said to have consistently failed to meet its obligations under the sale and purchase agreement as adequate ground for the determination of the sale of Nitel to Transcorp. Transcorp, reportedly owes about ₦17 billion in interconnectivity fees to other carriers and owes Nigerian banks about ₦80 billion.

According to the National Council of Privatization of Nigeria, Transcorp Plc – which has been hit hard by a decline in both fixed and mobile subscriber numbers, had breached its contract, and the government would control Nitel until a new core investor was found.

“The government is considering a technical board to manage NITEL until a new core investor emerges,” said Christopher Anyanwu, director general of the Bureau of Public Enterprises.

Transcorp bought 51 percent of Nitel for $500 million in August 2006, but Nitel has deteriorated so badly that Transcorp has been unable to raise the cash to turn it around.

The government said Transcorp failed to meet its obligations to invest ₦ 8.9 billion within 100 days of the takeover and had an unpaid debt totalling ₦17 billion.

According to the information, it has been difficult to find new investors for Nitel, which is heavily indebted and whose fixed lines have declined to less than 100,000 from five times that figure in 2001.

MTEL subscribers have also fallen to a few thousand from 1.3 million amid fierce competition since the Transcorp take over.

Nitel’s infrastructure has fallen into disrepair during decades of corrupt and inefficient state management. Many of its lines malfunction, its billing is erratic and staff go for months without being paid.

By Emmanuel K. Dogbevi

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