Nigerian Telecommunications Ltd (Nitel) Divestiture

Cancelled

On July 3rd 2006, the Nigerian Bureau of Public Enterprises awarded a 75% stake in national operator Nigerian Telecommunications Ltd (Nitel) to private company Transnational Corporation Plc. (TransCorp). At the time of the sale Nitel offered fixed line telephony to some 250,000 customers. At the end of 2006 Nitel also had an estimated 2.8 million mobile subscribers through its wholly owned M-Tel subsidiary. Nigeria fifth attempt to divest Nitel was a negotiated sale in which 28 expressions of interest were received and of which seven prospective investors were short-listed. Transnational Corporation in partnership with the British Telecom was selected as Preferred Bidder, meaning they had the Right of First Offer in the negotiated sale process and the others as reserved bidders TransCorp was a Nigerian company formed in 2005. It purchased privatized government assets in three sectors: telecommunications, energy and hospitality. This was the fourth major attempt to attract private participation in Nitel. In 2002 Investment International Limited (ILL) of Britain failed to pay the $1.317 billion it offered for a 31% stake in the company. In 2003 Pentascope, a Dutch company, won a bid to manage Nitel and put it on sound footing for an eventual sale (project 3158). The management contract was cancelled in 2005. A third attempt was made with Orascom of Egypt, but their 2005 offer of $256.43 million was deemed too low by the government. The project reached financial closure in November 2006, when TransCorp paid a first installment of $500 million to the government. Funding for the $500 million was secured with loans from a large consortium of local banks including Union Bank, UBA, Wema Bank, Skye Bank, and Intercontinental Bank Plc. In late 2006 TransCorp decided to only keep the 51% of Nitel it had already paid for. The remaining 24% of the Nitel stake were to be offered through IPOs on the Lagos Stock Exchange in 2007. The first IPO took place in February and was vastly undersubscribed. British Telecom (BT) was the technical for both Nitel and MTel following their acquisition by TransCorp in November 2006. Under phase one of this engagement, BT supplied consulting services to address key elements of the technology evaluation, reorganisation and reengineering of the companies, as well as supplying the interim CEOs for both Nitel and its mobile subsidiary, M-Tel. In April 2007 BT withdrew from Nitel and M-Tel and recalled their CEOs over failures to agree with TransCorp on key issues such as the operator’s working capital requirements. Following a performance review, an agreement was reached in December 2007 in which the government would sell 24% of its 49% stake and Transcorp would sell up to 27% of its 51% stake, giving the new core investor a 51% shareholding and thus majority ownership. In June 2009, the government took back control of the fixed line operator and its mobile unit MTEL, citing lack of investment and unpaid debts in the three years Trans National Corporation Plc bought a majority stake in the national carrier. Mtel/Nitel appeared to be closed in Q1, 2011. 2007: 3 911 270 mobile lines and 500 000 fixed lines.