Tag: NITEL/MTEL

Just when that heart rending feeling of what the once Nigerian Telecom flagship, NITEL/MTEL, had degenerated into is beginning to be replaced with a fresh hope of a new dawn, it smacks a rude shock in the face of the average patriotic Nigerian that some flutist would be playing a mournful tune.

This is what the recent strange outcry for the outright reversal of the transparent open bid process that led to the sale of NITEL/MTEL to private investors by a body called the Nigeria Association of Auctioneers (NAA) is tantamount to.

Could there be some merit to this sudden trumping? What if they have got strong grouses in the defence of our patrimony? These and many more inquisitive questions came calling in my mind. What are indeed the issues at stake?

Allegation of a twisted sales process

In statements credited to him by the media, the President of NAA, Alhaji Aliyu A. Kiliya has been accusing all government institutions involved in the liquidation and sale of NITEL/MTEL and the eventual buyer, NATCOM, of sundry allegations, many of them considered far-fetched by privatization watchers.

The height of such allegations was the one in which he claimed that it was NATCOM that appointed the liquidator. He even insinuated that the sale of non-core assets of the former Telco was handled by NATCOM.

If public records are anything to go by, then we all are well aware that after series of failed acquisitions and management contracts that were geared towards resuscitating the comatose NITEL, the National Council on Privatization (NCP) instituted in December 2012 an open competitive process in appointing a liquidator for the moribund institution. Otunba Olutola Senbore came out tops on July 11, 2013 with the assent of the Bureau of Public Enterprises (BPE). This appointment was then authenticated by a Federal High Court order, where Hon. Justice A.F.A Ademola ordered the liquidation of NITEL/MTEL assets by Otunba Olutola Senbore as liquidator on the 14th of March, 2014. So where did NATCOM come in at that time to appoint the liquidator as claimed by the NAA President, Alhaji Aliyu A. Kiliya?

It must also be pointed out that before the appointment of Otunba Olutola Senbore as liquidator, a large chunk of the non-core assets in contention by Alhaji Aliyu and his associates had been long sold out by a former authorized liquidator of NITEL, Otunba Olusola Adekanola. Economy watchers are still wondering why it took this body all these years of slumber to suddenly realize that those assets ought not to have been deposed by this liquidator. Again, the poser is: how does NATCOM come in at that stage when it had not even become a corporate entity as at then.

The process that led to the sale of the entity was not a one off affair nor did it take place in a secret coven of some sort. There were open invitations to interested bidders. The bid brought about 17 companies all in the running for the acquisition with equal access and opportunities. All the 17 made their technical bids. Two of these, NATCOM and NETTAG- came tops, qualifying for the next round. The last stage required the payment of a $10million bid bond. NETTAG got disqualified at this stage owing to the it did not come up with the mandatory $10 million bond thereby leaving the coast clear for the emergence of NATCOM as the eventual winner of the bid round.

But even then, victory did not come NATCOM’s way on a platter of gold. Indeed, its initial price offer of $221million was turned down at the open bid, and given a last chance to meet briefly and increase the offer. It was the eventual offer of $252million that brought victory to the eventual buyer of the Telco.

Could Nigeria have been shortchanged?

The Association through its President also had an attack on the cost of the sale, saying “there was a firm that offered a bidding price of $1billion for NITEL.”

Interestingly, one believes any discerning mind would easily ask why they have failed to mention the name of that firm. That aside, December 2005 was when Orascom of Egypt, a well experienced Telecom operator made a final bid of $262million for a NITEL that was a going concern, with a sizeable number of subscribers, a relative brand goodwill with the MTEL trademark, Switch Exchanges that were still functional, a SAT3 optical cable that had no direct competition in the country at the time, the most expansive CDMA technology fibre network outlay in the country and many more. At the acquisition of NITEL by the NATCOM consortium in December 2014, there was no market share of any sort, operations had long ceased, most of the equipment had been stolen while those remaining had gone obsolete, SAT3 the only prized asset of the now dying business was now way behind in the scheme of things (with the Glo SAT1 and Main One submarine cables having gained grounds in internet connectivity).  Also very important of note is the fact that by now, the comatose Telco had been stripped almost naked of its non-core assets.

Was NITEL acquired only to be stripped of its assets?

This is not an impossibility as asset vultures are way still in business. But this was clearly envisaged in the agreement signed with the successful bidder, NATCOM: none of the asset of the company would be allowed for sale for an extensive period. Indeed during the House of Representatives probe into the sale of NITEL, BPE officials present emphatically stated that none of NITEL’s assets transferred to NATCOM had been sold by the legacy owner.

In fact, if anything at all, what NATCOM has suffered is the loss of vital assets in questionable sale long before legacy owner happened on the scene. Many of the assets of NITEL had long been sold off by previous liquidators in order to offset its debt. An example that stands tall, is that of the Necom House, NITEL’s legacy asset and understandably so. It stands as the fourth tallest building in the whole of Africa and the tallest on the West Africa sub-region. The new buyers had discovered that the headquarters of the business had been sold. The legacy owner of the Telco had to purchase the building which ordinarily should have been part of the package.

The new owners have no doubt proven to be out for business. Investing hundreds of millions of dollars into the once dead entity, rejuvenating its lost glory with a brand christening as ‘ntel’. Rolling out what is currently adjudged to be the fastest Internet connectivity present in the market today. Its 4G Long Term Evolution [LTE] network is now present in Lagos and Abuja; and very soon in Port-Harcourt, with concrete plans to rollout into 14 additional states in 2017. Throughput speeds have topped 100mbps and average cell throughput on14mbps, making music streaming, cloud services, TV, browsing, messaging, real time tele-conferencing and hot-spot services a reality. It has since reported over 100,000 pre-registered lines.

What then could these individuals be said to be out for? Progress of the Nigerian economy? Certainly No. Job creation? No. A living legacy for our dear NITEL? Obviously No.

We can seek for a better Nigeria and rise above our current economic woes with strong businesses. Let’s keep off this Pull Him Down (Phd) syndrome, For NITEL/MTEL, this indeed is a true rebirth.

*Ahmed sent this piece from Abuja

Following inquisition by the National Assembly and other stakeholders into the privatisation of the nation’s premier telecoms outfit, NITEL and its subsidiary, Mtel, it does appears that the behemoth is jinxed after several unsuccessful attempts to privatise it. Jide Babalola and Ibrahim Apekhade Yusuf in this report examine the issues

There is a general consensus that any proper review of the Federal Government’s $252.251 sale of the Nigerian Telecommunications Limited (NITEL) and its subsidiary, Mobile Telecommunications Limited (Mtel) in April 2015 may easily run into crosswinds against the transparency and accountability principle that the current administration holds aloft as a cardinal principle.

Indeed, it is easy to recall that since 2001 when the former President Olusegun Obasanjo administration put in motion, its plans for sales or privatisation, suspicions and questions continuously trailed the exercise, especially when NITEL/Mtel were brought to the auction table.

In December 2014, the chairman of the National Council on Privatisation (NCP) Technical Committee, Atedo Peterside had announced at a meeting presided over by Vice-President Namadi Sambo, they had liquidated Nigeria Telecommunication Plc. and its subsidiary, Mtel, to NATCOM Consortium for $252million.

Subsequently, the sale process was concluded with documentations in April 2015.

It is worth noting too, that the sale of NITEL/Mtel took place after about four or six untidy and controversial earlier processes undertaken by the NCP through the Bureau of Public Enterprises (BPE). Yet tongues have continued to wag over what many continue to see as inadequate concern for transparency in the sale of such national patrimony.

Sure, NITEL was prominent among Nigeria’s public enterprises that suffered consistent mismanagement by successive leaderships that saw no wrong in milking the cash cow till death.

Its jaded privatisation history started in 2000 when the new democratic administration began to implement its plans for a reform of the telecommunications sector.

In 2001, the government tried to sell 51 per cent equity in NITEL/Mtel to Investors International London Limited (IILL) as the strategic core investor.

Pentascope which acquired 51 per cent of  NITEL equity, along with its management contract went under less than three years thereafter. Pentascope claimed that government’s continuous inclination for pokenosing into the running of NITEL diminished great possibilities. In turn, the Federal Government saw the firm as one that was incapable of demonstrating a strength for market competitiveness.

Thus by year 2005, a bid by Orascom Telecoms fell through.

By 2006, the Transnational Corporation (Transcorp) had acquired 51 per cent majority stakes in the firm for $500 million. After another round of blame game, the Federal Government eventually voided the sale of the telecoms giant in 2009 and appointed a technical board to manage the carrier.

The strategic core investor sale in 2011, where New Generation Communications Limited and Omen International emerged preferred and reserved bidders respectively, ended up without success.

Following the last failed attempt, former Vice President Namadi Sambo-led NCP, adopted the guided liquidation strategy for the sale of NITEL/Mtel.

Throughout the processes deemed by many to be far from being transparent, NITEL’s assets declined in value. Even today, after its last ‘sale’, NITEL has continued to generate interest as Nigerians still wonder, with suspicions about the level of criminal neglect and corruption that the firm has suffered under the hands of people with connections in high places.

Expectations for a review

In August last year, Permanent Secretary in the Ministry of Communications, Mr. Tunji Olaopa came out of a briefing for President Muhammadu, Buhari with ‘big news’ for waiting journalists.

According to Olaopa, the President had just mandated his ministry to provide details of the recent privatisation of the Nigerian Telecommunications (NITEL) and its mobile arm, Mtel so as to ascertain whether or not Nigeria was short-changed.

He said Mr. President was concerned about the possibility of Nigeria not receiving a fair value from the deal.

“The President was also concerned about the liquidation of NITEL. He is not opposed to its privatisation but he wants to know and he wants us to bring a memo on how the whole transaction was undertaken so that he would know whether Nigeria was short-changed,” he said.

Mr. Olaopa said the President was very concerned about the whole issue of privatisation that is hindering investments in ICT and said “that he will personally champion this.”

At the time, industry watchers eagerly awaited a review of how a consortium run by erstwhile Skye Bank’s chairman, Tunde Ayeni, the founder of Sahara Energy, Tonye Cole, and two other companies, used their NATCOM Telecommunications consortium to emerge as sole bidders for NITEL/Mtel which they bought for $242.3 million, equivalent to about N42.4 billion at the time.

Ayeni reportedly owns at least three of the seven companies in the NATCOM consortium that comprises NATSPACE Telecommunication Investment Limited, PCCW Global Limited, Prime Union Investment Limited, Olutoyi Estate Development & Services Limited, Legal Resources Alliance & Co., Sahara Energy Resources Limited, and LM Ericsson Nigeria Limited.

The acquisition of NITEL/Mtel by Ayeni and co came barely two months after Ayeni had led Skye Bank to buy Mainstreet Bank from Assets Management Company of Nigeria, for N120 billion.

Barely one year before that, Ayeni’s Integrated Energy Distribution and Marketing Company Limited had bought the Ibadan and Yola Electricity Distribution Companies, DISCOs.

Part of the reasons why the sale of NITEL/Mtel to little-known NATCOM consortium raised eyebrows was the near-mystery aura surrounding NETTAG Consortium. Even though it was NATCOM’s sole ‘competitor’, NETTAG failed to attach a $10million bid bond to its bid submission as stipulated in the Request for Proposals (RFP) given to prospective bidders, thereby earning a disqualification that left the prize for NATCOM to win so easily.

Thus in August, 2015 when  Ayeni received the operational licences of NITEL and Mtel on behalf of his consortium, he unequivocally stated that they would work towards investing about $ 1 billion, with a view to providing Nigerian subscribers first-class rated services.

Strident calls for review

Expectedly, there have been welter of criticisms over the privatisation of NITEL from different quarters.

“For NITEL, the mess that has characterised its sale, privatisation, commercialisation or even liquidation, depending on whatever interpretation can be given to the sorry pass such a behemoth has come to, is a shame too much for a country like Nigeria,” a newspaper editorial noted in its September 2, 2015.

Thus there have been strident calls on the need to revisit sale of NITEL and other national assets.

One of the strident voices opposed to the process of the sale of NITEL/Mtel is to the Nigerian Association of Auctioneers (NAA).

According to the National President of the NAA, Alhaji Aliyu Kiliya, President Muhammadu Buhari is duty-bound to honour his promise to probe the sale of NITEL/Mtel, following the outrage that trailed such sale.

Kiliya made the appeal in an open letter to the Vice President, Professor Yemi Osinbajo who is Chairman, National  Council on Privatisation.

“The National Association of Auctioneers (NAA) as stakeholders filed a case in Bauchi Federal High Court against the liquidator who was appointed by the Bureau for Public Enterprise (BPE).

“We feel disappointed by the way and manner NITEL and MTEL sale was carried out.

“The items were supposed to be sold by open and competitive bidding, instead of secret bidding,” Kiliya argued.

He said the NAA is dismayed that despite the direction by the Federal High Court judge that status quo should be maintained, it was regrettable that NATCOM took over all the  items of NITEL/Mtel nationwide, contravening the order that was given by the court.

“In this regard we are appealing to your good office to, as a matter of urgency, kindly  stop immediately the selling of NITEL/Mtel as we believe that a lot of revenue is being looted. That is why they were rushing to sell and if this is allowed to happen a lot of revenue will be lost,” he said while emphasising the need for a reversal of the sale process.

Other critics of the sale attributed it to the unusual clout of Mr. Ayeni and his closeness to the PDP federal administration.

In December, 2014 when N21.2 billion raised by the PDP at its fund raising dinner held at the Presidential Villa, Abuja, Mr. Ayeni, who was chairman of the occasion, donated N2billion – N1 billion on behalf of himself and his partner and another billion on behalf of his friends. This provoked arguments and discussions online.

In response to someone who expressed reservations about the sale of NITEL to Ayeni, a comment on a popular blog, Nairaland forum stoutly defended Ayeni at the time.

“Because Ayeni bought NITEL, he should not contribute to the political campaign of his choice? Money is the lifeblood of politics, as our system matures, more billions will be spent by politicians and their supporters to win elections. That’s the way it works around the planet. What we should ask of them, is a public disclosure of the people donating.

“No secret accounts or payments from unknown parties. PDP and GEJ did the right thing, by having a public fundraiser, where you and I can point to who gave what. Rich people will always be at the front of table, that’s life. Don’t cry about it, just try your best and become one of them,” he stated.

On December 3 last year, the House of Representatives directed its Committees on Telecommunications and Privatisation to conduct a thorough investigation into the liquidation and sale of NITEL and Mtel by BPE.

The House expressed concern that since the sale of the companies, a lot of controversies have been raised about the processes leading to their sales, particularly allegations that the companies were under-valued before they were sold.

Hon. Henry Nwawuba (Imo PDP) in a motion said the revenue potential of the companies are huge, and they also have capacity to bridge the unemployment gap among young Nigerians.

There is a need to resolve the issues surrounding the sales and takeover, he said.

On his part, Hon. Aminu Shehu Shagari (Sokoto APC) alleged that the companies were sold for more than $250million rather than the $242.3 million declared publicly.

On March 10 this year, the House of Representatives gave the BPE a clean bill of health over the sale of NITEL and its mobile network, Mtel to the NATCOM consortium.

Review as litmus test for Buhari

However, discerning Nigerians hold the view and very strongly too that Nigerians deserve a full disclosure, not only on the sale of NITEL or Mtel but on every other part of the national patrimony that has been supposedly sold or privatised.

The current momentum to sanitise the system must be sustained and there should be no hiding place for the locusts that have destroyed Nigeria till date.

According to the school of thought, at this point, a template for transparency must be created for the sale or management of the nation’s investment or national institutions.

With the assets acquired from NITEL including cellular spectrum/microwave frequencies, telecom operating licences, international submarine cable, which is the SAT-3, cell towers, fibre and duct network (including Right Of Way), prime buildings and satellite earth stations, NATCOM has transformed Nitel/Mtel into Ntel, with an aim towards gaining industry foothold in no time. This year, the NatCom Development & Investment Limited brought in a highly-connected business tycoon, Gen. TY Danjuma, as Board Chairman, towards confronting various challenges and moving the company forward.

Yet the debate over a possibility of government’s revisit of the sale of Nitel/Mtel assets continues to linger.

 

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, BPE

At a recent Public Hearing on the acquisition of NITEL/MTEL by the House Committee on Telecommunications in Abuja, Olatunde Ayeni, the Chairman of NATCOM disclosed to the 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 to this, NATCOM will offer high definition voice and high speed data services over direct fiber connections (freshly laid by NATCOM), to enterprise customers where locations are adjacent to this new metro fiber 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 tortous is to put it mildly. For an entity with a record of five failed privatisation 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 investors fleeting attention, the National Council on Privatisation, NCP in February 2012 approved the privatisation 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 Honorary Committee members through the guided Liquidation process; an explanation that was in agreement with those of the Bureau of  Public Enterprises (BPE) and the liquidator appointed for the two critically ailing entities.

Earlier in April, last year at the official NITEL/MTEL handing Over 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 National Council on Privatization, 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  December 17, 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 licenses 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 November 7, 2014. The submission was accompanied by the Bid Bond, in the amount of $10M USD, 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 December 3, 2014. Officials of BPE, NCP, EFCC and Ministry of Communications Technology attended the event.

At the Public Ceremony, NATCOM offered to buy the businesses and assets of NITEL/MTEL for $221million United States Dollars. 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 $252.25million US Dollars.

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 $256million US Dollars.

He explained further: “ 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 per cent, and three, the portfolio for sale included core and non-core assets the later of which has since been completely stripped along with a substantial part of the former.”

A telecommunications analyst, Otunba Biodun Ajiboye, agrees with the NATCOM boss. “if you factor in the fact that by 2005 when ORASCOM offered N256million, 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 $251million US Dollars, the transaction weighed heavily in favor of Nigeria. It was a good transaction for the country.’

As stipulated by the liquidators, not only did NATCOM pay 30 per cent 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 per cent. But even then, the tortours 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 a US Dollar, had created a payment short fall which NATCOM most cough out. It was a tidy sum of N6.6billion. NATCOM’s compliance with the additional payment instruction by the liquidator brought the deal to a close with acquisition of NITEL/MTEL by NATCOM.

Ayeni told the committee members: “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.”

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 an ongoing refurbishments to derelict buildings so that they may be reused for business purposes. Since NATCOM took over NITEL/MTEL, it has expended about $1billion US Dollar in getting the moribund former National teleco back to work, about 100 Nigerians have been employed. Hundreds more will be engaged, directly or indirectly, by NATCOM in the months ahead.

It is in the light of the above that Ayeni submitted to the Honorable Committee members that “the objective of the NCP, which was to execute the full and final privatisation of NITEL/MTEL and in doing so to resolve these companies liabilities of some N350billion 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 honorary 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 could not have put it better.

 

• Adedoyin wrote in from Ikeja, Lagos.