Last year, the Bureau of Public Enterprises (BPE) sold the former state-run Nigerian Telecommunications Company (NITEL) and its mobile arm, Mobile Telecommunications Limited (MTEL) to NATCOM Consortium, now operating as ntel. With about 150 million telephone subscribers, 46 per cent internet penetration and a cut-throat competition, threatening the survival of the industry accentuated by economic recession, LUCAS AJANAKU weighs the foray of ntel into the telecommunications market.
AFTER about five failed attempts, the Federal Government, may have found a new manager for the former state-run Nigerian Telecommunications Company (NITEL), and its mobile arm, Mobile Telecommunications Limited (MTEL) (NITEL/MTEL) in NATCOM Consortium.
Until last year’s transfer of ownership, all previous attempts to revive the moribund telecoms octopus failed to yield the targeted results as its sales to five preferred bidders failed to sail through.
It was therefore not a surprise when Dr. Olatunde Ayeni, then the consortium Chairman, said: “A new player, a new entity is entering the telecom industry today and a new brand and a strong brand has come.”
Ayeni spoke shortly after his firm got the certificate of ownership of a National Carrier and Gateway License of NITEL/MTEL and the spectrum from the Federal Government in Abuja. It was at the presentation of the company’s documents to its new owners by the National Council on Privatisation (NCP).
Unfolding his company’s plan for the moribund carrier, Ayeni promised that NATCOM, through ntel, will bring a brand that will delight customers and the telecom market through its customer-centric products and services.
According to him, it was a vacuum in the telecoms world that attracted NATCOM into the competitive market. He described the vacuum as that of “listening to the customers and delighting them with what they need.”
NATCOM, Ayeni said, has resolved to put the customer at the centre of the business by making them kings and queens.
But beyond the rhetoric, filling the perceived vacuum may not be as easy as Ayeni thought. For one, established players – MTN, Globacom, Airtel and Etisalat – are locked in cut-throat competition in both the voice call and data bundle spaces of the industry.
The competition has taken toll not only on service quality but also on the bottom line with naira devaluation and drastic drop in subscribers’ disposable incomes. This has also affected average revenue per user (ARPU) of telecoms users. Besides, all the firms are bracing to embrace the 4GLTE services with massive investment.
In the area of data, which is now the next cash cow for operators as voice reaches its zenith, MTN has secured the licence of Visafone, the ‘last man standing’ in the Code Division Multiple Access (CDMA), with spectrum in 800 megahertz (MHz) band and another 2.6 gigahertz (GHz) spectrum, all adjudged excellent for mobile broadband services on LTE.
Swift, Spectranet, Smile Communications, ipNX Nigeria Limited and recently, InterC Networks are warming up to roll out super-fast data services on the 4GLTE network, so also are some of the companies. They are encouraged by the fact that the NCC does not award technology-specific licences to operators.
The Internet Service Providers Association of Nigeria (ISPAN) has urged ntel not to follow existing business model if it must attract subscribers.
“They have basket of licenses, huge capacity of fibre links across the country, if it can provide unlimited bandwidth at affordable price, they will attract huge customers. 4G LTE is a good start, but it cannot survive on data alone they should provide voice service and to get smartphones that are compactable with 4G LTE is expensive; if they can come up with 4G LTE SIM and give to people with the device, that will be good for them,” ISPAN’s immediate past president, Samuel Adeleke, said.
All the operators share some 148,745,464 subscribers on their networks. In a report by an online platform, Internet Live Stats, has also showed that Nigeria boasts of 86,219,965 internet users; 46.1 per cent penetration level in a population of 186,987,563; 100,767,598 non-internet users (internetless); a five per cent or 4,124,967 one year user change and 2.63 per cent population change.
The Chief Executive Officer (CEO) of ntel, Kamar Abass, appears undisturbed by the daunting challenges. “We recorded over 100,000 pre-registered subscribers during our number reservation exercise and the subscriptions continue to grow daily. And our services have been incredibly well received by customers: we are recognised for being the highest speed network in Nigeria today and we are working on getting a larger range of devices at lower prices to further expand access to and appeal of our network.”
Litany of failed attempts
Getting a new manager for NITEL/MTEL was herculean for the NCC. The two agencies were state-run monopolists and therefore a conduit for rent-seeking and high-wired corruption.
In 2001, the strategic core investor sale of the telco’s 51 per cent shareholding to International London Limited (ILL) fell through. IIL, which offered to buy the moribund telco for $1.3 billion, did not keep to its promise. It failed to pay the bid price.
Then came Orascom, an Egyptian firm. Like ILL, Orascom also failed to pay. This led to the consideration of the management contractor option that brought Pentascope into the scene. It was hoped that Pentascope would turn around the misfortunes of the telco. Despite the stiff resistance put up by aggrieved NITEL/MTEL employees, who surrounded the Transcorp Hilton, Abuja venue of the signing of the agreement in 2002, the then Director-General of the Bureau of Public Enterprise (BPE), now Kaduna State governor, Mallam Nasir el-Rufai, went ahead to sign on Pentascope.
The workers said they had investigated the firm and discovered that it was just a paper tiger occupying a one-room office in Germany and therefore incompetent to return NITEL to the path of profitably. The workers were later vindicated as Pentascope’s inability to manage the firm became a public knowledge. The incompetence of the firm pitted the former BPE chief against the National Assembly.
Another attempt was that of Transnational Corporation of Nigeria Plc (Transcorp), which was hurriedly put together under the administration of former President Olusegun Obasanjo. It lost the bid to take over the ownership of the octopus as the National Council on Privatisation (NCP) approved the revocation of NITEL/MTEL sale to it on June 1, 2009.
“The revocation was due to Transcorp’s inability to transform the company, resulting from its non-injection of the much-needed fund into NITEL and MTEL, its total refusal to adhere to the terms of the Share Sales Purchase Agreement (SSPA) and failure to meet its obligation to its staff in terms of payment of salaries,” the BPE explained.
In the light of these bungled attempts, failures, when New Generation emerged the preferred bidder again in 2011 to buy the telco, there was thick pall of doubts.
So, when Prof Taiwo Osipitan, a member of the Technical Committee of the NCP announced New Generation Communications Limited and Omen International Limited as the preferred and reserved bidders, respectively with $2.5 billion bid price, it was received with little excitement in the industry.
However, because of the past failures and disappointments, BPE devised a new strategy to sell the telco that had become an albatross to the Nigerians.
NCP approved that NITEL/MTEL be sold as a whole or unbundled as market forces will dictate. Preference was given to bidders who desired to acquire NITEL/MTEL as a single entity.
The unbundled units include, NITEL fixed lines, transmission backbone, MTEL, SAT 3 and the Cold Division Mobile Access (CDMA) network. That also did not work out as planned. On February 27, 2012, NCP approved the privatisation of NITEL and Nigerian Mobile Telecommunication (MTEL) again through “guided liquidation.”
The latest attempt
The attempt looked good as the last. What scared other buyers like labour liabilities and the fear of sabotage by aggrieved employees, have been taken care of by the Federal Government.
The NCP at its February 27, 2012 meeting approved the privatisation of NITEL/MTEL through “guided liquidation.”
The strategy was adopted by the Council after due consideration of other options and in the light of the previous failed attempts to sell the telco through Strategic Core Investor Sale and Negotiated Sale and the huge liabilities of creditors of over N300 billion.
Under the guided liquidation strategy, it was decided that all the core assets and business undertaking of NITEL/MTEL would be sold as single or multiple lots to a qualified bidder by the liquidator under the general guidance of the NCP.
The BPE received Expressions of Interest (EoI) from 17 organisations/consortia at the closing date of receipt of EoI on June 30, 2014.
On September 18, the two applicants, NATCOM Consortium and NETTAG Consortium, that met the minimum pass mark of 75 per cent were pre-qualified and issued the Request for Proposals (RfP) and allowed to proceed to the data room and physical due diligence stage prior to preparation and submission of their technical and financial proposals.
On December 3, last year, NATCOM emerged the preferred bidder with $252 million. In other words, NITEL was bought for $252 million.
According to estimates, NITEL, as a national carrier has over $1 trillion assets but most of them have either been vandalised, stolen or have become disused and obsolete. NITEL would have been the most sought-after telecommunications company in the country because of its wide network and solid infrastructure base but corruption was its bane.
Two bidders submitted technical and financial proposals after which NATCOM met the technical requirement.
Its financial proposal was publicly opened on October 24, 2014. The first bid was $221 million which was below the reserved price. After a second round of bidding, the revised bid of $252,221,000 was above the reserve price. NATCOM was therefore declared the preferred bidder.
Job prospects
Ayeni told House of Representatives Standing Committee on Communications that NITEL/MTEL (ntel) will employ 10,000 Nigerians.
The new owners of the telecommunications giant, NATCOM, which is a consortium of seven local and foreign companies, made the disclosure at an investigative public hearing by the committee in Abuja.
He told the Committee that having met all requirements and due diligence in the process leading to NITEL/MTEL acquisition, the company has designed a programme to resuscitate the two ailing telecoms companies.
According to Ayeni, efforts were ongoing at overhauling the entire cable system while thousands would be employed to set the companies on the part of competition with other players in the market.
Expressing satisfaction with NATCOM and its work-plan, the Saheed Fijabi-led Committee directed both the BPE and the NCC to meet and discuss the sales of the two national telecoms firms.
The parley according to the Committee was to review the commercial and technical areas of the sale as they affect the telecommunications regulatory body and the BPE.
It (Committee) particularly expressed concern over the settlement of NITEL indebtedness by its new owner, noting that though NATCOM did all that were required of it despite not been given any form of waiver by the BPE and NCC in the process leading to the sales, it pointed out that it was however necessary that the grey areas of NITEL’s indebtedness be sorted out by the BPE and NCC. The Committee urged the regulators to furnish it with a report after consultation.
Assets
Some of NITEL’s assets are: fixed lines; transmission backbone; MTEL; SAT 3 and the CDMA network. SAT-3 is the backbone of telecommunications infrastructure, traversing the West African sub-region and beyond.
As at 2001, SAT-3 was valued at more than $300 billion. NITEL House on Marina, Lagos Island, used to be the tallest building in West Africa with more than 25 floors until the Union Bank Tower on the same street came in the 90s. Besides, it is situated in a choice area within the Lagos Central Business District (CBD). As one of the GSM operators, MTEL licence was acquired in 2000 with $284 million.
Out of N609,398,074,485.63 the Federal Government spent on privatised enterprises, NITEL alone has N126,716,111,589.00 labour liabilities.
Milestones
NITEL/MTEL’s new managers, ntel, said it has made its first Voice over Long-Term Evolution (VoLTE) call in the country. It said the test VoLTE call was made on its new Tier III data centre located on Lagos Island.
VoLTE calls are enabled over a carrier’s high-speed data network instead of a voice network. Voice over LTE calls also connect faster upon dialing and feature ultra-clear high-definition voice quality.
The VoLTE call was completed in partnership with Original Equipment Manufacturers (OEM), Ericsson of Sweden and Sony Electronics of Japan. It followed ntel’s first data call on January 18 and its first Session Initiation Protocol (SIP) voice call on February 18.
According to Wikipedia, SIP is a communications protocol for signaling and controlling multimedia communication sessions. The most common applications of SIP are in Internet telephony for voice and video calls, as well as instant messaging, over Internet Protocol (IP) networks.
With the development, ntel said it will commence work with other mobile operators and international partners to perform cross-network VoLTE calls.
“This will ensure that ntel’s customers can connect with each other as easily as they can to both customers in Nigeria and to those elsewhere in the world: a network now comprising more than seven billion telephones, globally” , Abass, said.
According to him, the high-definition VoLTE call was made through an ntel Subscriber Identity Mobile (SIM) card, “and is set to be a significant differentiating factor for ntel as it progresses with the rollout of Nigeria’s largest Advanced 4G/LTE network, due to be launched shortly.”
Abass said: “The successful test call is a confirmation that the key network elements are now in place to support the full commercial launch of premium integrated voice, video and data services over 4G/LTE.”
“The ntel network is built on the 900/1800 Mhz, which are the most efficient propagation frequencies for the deployment of 4G/LTE technology.”
The company made its first test data call in Lagos on January 18 a few days after Ayeni appeared before the House of Representatives Committee on Communications.
$1b cash injection,
March rollout deadline
Speaking during his appearance before House Communications Committee, Ayeni told lawmakers that ntel was committed to investing over $1 billion to the rollout of commercial services, starting in Lagos, Port Harcourt and Abuja.
He said the cash and other efforts would see the company engage 4,000 employees by March this year ahead of rolling out its mobile lines and 4G/LTE services for broadband users.
It is however unclear how much of the $1 billion cash investment has been kept in view of the crippling foreign exchange problem. Stakeholders are optimistic that with the choice of Gen Theophilus Danjuma as board chairman, the firm may breathe an air of freedom.
ntel plans to launch voice service on 0804 numbering plan designed for allocation of a unique national number to each subscriber connected to the national telephone system. The numbering capacity of the mobile plan is 10 million lines.
The numbering plan provides, more importantly, a uniform dialing procedure for local calls; national long distance calls; and international calls.
It is part of licenses acquired from the regulator that is charged with the development of the National Numbering Plan for the Nigerian telephone network (both fixed and wireless) and ensuring the allocation of unique national numbers to each subscriber connected to the network.
Abass said spaces still abound in the market place for new SIMs; hence, ntel as a new entrant has many opportunities, listing the acquired assets as: cellular spectrum/microwave frequencies; telecom operating licences, international submarine cable, which is the SAT-3 and cell towers.
He added that the company also acquired fibre and duct network (including Right of Way), prime buildings and satellite earth stations.
Push to void NITEL/MTEL privatisation heightens
In its determination to conduct an investigation into the sale NITEL/MTEL by the BPE, the House of Representatives has mandated its Committees on Telecommunications and Privatisation to conduct a comprehensive investigation into the liquidation and takeover of the two telcos by NATCOM and report back to it in for further legislative actions.
The resolution followed a motion titled: “Call for Investigation of the Sales of Nigerian Telecommunications, NITEL, and Mobile Telecommunications, MTEL, by NATCOM”, brought by Henry Nwawuba.
In his lead debate, the lawmaker expressed the concern that since the sales and subsequent takeover of the companies by NATCOM, there have been lots of controversies, especially their alleged under-valuation.
Nwawuba said the two entities have the potential to generate huge income and provide create employment opportunities. The lawmaker spoke of the importance of resolving the issues surrounding the sales and takeover of NITEL/MTEL by NATCOM.
Contributing to the debate, Minority Leader, Leo Ogor, who regretted that NITEL/MTEL ‘are worst now than before the privatisation’, said the policy favoured foreigners to siphon the country’s resources.
Others, who also contributed were unanimous that the buyers of NITEL/MTEL were more interested in the assets of the two companies than reviving them.
They alleged that almost all the telecommunications service providers in the country today were making use of the facilities of NITEL/MTEL.
The lawmakers agreed that the committee should take a critical look at the privatisation laws to immediately reverse the sales, insisting that on the need “to ensure that these assets are returned to the real owners who are the Nigerian people.”
Liquidator, creditors disagree
The process of disbursement of outstanding claims has sparked a crisis of confidence among NITEL/MTEL liquidator, Otunba Olutola Senbore and the creditors, numbering about 300.
The creditors faulted the liquidator’s claim of having paid out N47, 518, 398, 000 to the various creditors from the N51, 648, 643, 000 raked in from the transaction.
Irked by Senbore’s claim, the creditors demanded a detailed report of payments to the creditors from May last year 2015 to August this year, a request turned down by the liquidator.
According to the aggrieved creditors, the liquidator paid 15 per cent of their outstanding money in May last year, and another payment of 1.5 per cent in July this year.
The liquidator also claimed to have paid 12 per cent of debts owed to bigger creditor organisations like Ericsson, MTN and others in November last year, but declined to disclose what percentage he paid in July this year.
Speaking through their representative, Alhaji Kabiru Usman, the creditors said: “Going by the quantum of the disbursement, the liquidator has so far paid about 28 per cent of the entire creditors’ verified claims.
“This leaves a balance of 72 per cent of the claims yet to be paid to the creditors, even as the liquidator has failed to support his claim of having paid the creditors N47, 518, 398, out of the N51, 648, 643 000 he said was realised from the transaction.”
The creditors have protested against the piecemeal payment adopted by the liquidator and his refusal to provide detailed financial information on disbursements. They have appealed to Vice President Yemi Osinbajo, as the NCP chair, to intervene and prevail on the liquidator to release the balance of their money.
According to them, about 72 per cent of their money is still being held by the liquidator, for debts owed them more than 10 years ago
But the liquidator said the creditors will get further payments after the redemption of debts by beneficiaries of the liquidated firms. He declined to state the amount of the debts outstanding.
“All we ask for is detailed financial information on all payments made to the creditors up till date. The process must be seen to be transparent because accountability has become a big issue in this matter,” the creditors said.
