Nigeria puts up NITEL for liquidation

The Nigerian government has decided to liquidate state-owned telecoms company NITEL, after a series of failed efforts to sell it over the last decade.

A statement from the country`s Bureau of Public Enterprises says NITEL and its mobile arm, M-Tel, would be sold through “guided liquidation”, in view of the operator`s huge liabilities. NITEL`s debts amount to $1.89 billion, according to the Financial Times.

The government-owned operator used to hold a monopoly in the West African country`s telecoms market. However, it lost its relevance over the past decade, with the growth of mobile operators, such as MTN.

Nigeria`s combined 90 million active mobile phone subscribers dwarf NITEL`s approximately 500 000 fixed-lines.

Nevertheless, NITEL has key fixed assets. Up for grabs in the liquidation process are its undisclosed stake in the SAT-3 submarine cable, which stretches from Europe to SA, as well as transmission stations and cabling networks.

Efforts to privatise NITEL started in 2001, when Investors International London Limited won a bid to acquire the company, but it defaulted on paying the final price of $1.317 billion.

Then, in 2003, Pentascope of the Netherlands was appointed as management contractor to revamp the company for another privatisation process. That contract, though, was cancelled following the Nigerian government probe that accused Pentascope of having a lack of capacity to turn NITEL around.

In 2006, Transcorp won a bid to acquire the company for $500 million, but it also failed to pay. The latest attempt, in February 2010, saw New Generations consortium, which includes China`s Unicom, emerging as the preferred bidder. It offered to buy NITEL for $2.5 billion, which it too failed to pay.

Following government`s numerous botched attempts to sell the telco, IT experts say the latest move of “guided liquidation” of NITEL has been long overdue.

Lanre Ajayi, MD of PINET Informatics, says: “Guided Liquidation may be appropriate in this particular case; it seems to me to be the only option and may turn out to be a good option, because some other options have failed.”