Nigeria's Senate Says Government Should Complete Sale of Nitel to Bidders

Nigeria’s government should approve the sale of Nigerian Telecommunications Ltd. to the companies that bid $2.5 billion for the state-owned fixed-line phone operator, the head of a Senate oversight committee said. New Generation Telecom Ltd., consisting of China Unicom (Hong Kong) Ltd., Minerva Group of Dubai and Nigeria’s GiCell Wireless Ltd., won the bidding for 75 percent of Nitel on Feb. 16. Nigerian President Goodluck Jonathan suspended the transaction on March 12 and told a committee including senior ministers to conduct further due diligence on the bidders. “I don’t see why we can’t go ahead,” Ayo Arise, chairman of the Senate Committee on Privatization, said in a telephone interview on June 30. “The bidding process appeared to be quite transparent.” Jonathan ordered the review after China Unicom, China’s second-biggest mobile-phone carrier, denied any involvement in the winning group. The Chinese operator later said one of its units was interested in “providing technical and managerial support.” The head of Nigeria’s Bureau of Public Enterprises, the agency that sells state-owned assets, was suspended in March by the government. It didn’t give a reason for the decision. In April, the acting head of the BPE, Bolanle Onagoruwa, urged Jonathan to award Nitel to New Generation. Failure to do so would send the wrong signal that Nigeria can’t abide with “simple processes and procedures,” Onagoruwa said. Chukwuma Nwokoh, a spokesman for the BPE, said last month that no action would be taken until Jonathan makes a ruling on the investigation he ordered. Ima Niboro, Jonathan’s spokesman, didn’t answer his mobile phone today when called for comment. Nitel’s sale to New Generation must be cancelled should the group of investors fail to pay $2.5 billion, Arise said this week. The minimum price for Nitel should be $1 billion, he said. “There’s a whole lot of money buried in Nitel and it shouldn’t be sold for less than $1 billion,” Arise said. Nomura Holdings Inc. analyst Danny Chu wrote in a report in February that the $2.5 billion offer for Nitel was “relatively high” compared with Bharti Airtel Ltd.’s $9 billion purchase of the African wireless assets of Zain. Nitel’s annual Ebitda, or earnings before interest, tax, depreciation and amortization, was estimated at about $13 million, according to Chu. A previous attempt in 2006 to sell Nitel to Transnational Corp. was annulled after the Lagos-based investment company failed to comply with sale conditions.