Nitel May Not Get Core Investor in Feb 2009

Mergers, Acquisitions and Financial Results

Indications have emerged that Nigerian incumbent Nitel may not get a core investor in February 2009 after all. The Bureau of Public Enterprise (BPE) is said to have decided to stop the consultant to the deal, BNP Paribas, from working further on the search for a core investor for Nitel. Again this leaves the company stranded in terms of management and access to investment capital.

ThisDay gathered that BPE might have taken this position because it had suddenly discovered that getting a core investor for Nitel in the current financial climate may not be viable.

One reason is that the Federal Government which owns 49% of the shares in Nitel has whittled down its shareholding considerably by ceding 15% of the shares to the Nigerian Communications Satellite, NigComSat and 6.9% to IILL which had made part payment of $131 million to the Government in a bid to acquire Nitel in 2003, from the $1.3billion it offered to pay. The 6.9% represents the part payment paid already made. While the FG had also offered 4% share to NITEL workers. This translates to a shedding of 25.9%, leaving the Government with 24.1%.

ThisDay further gathered that at a meeting held between officials of the BPE and Transcorp officials, the Bureau was said to have asked Transcorp's Group Managing Director, Tom Iseghohi, to cede its shares to the BPE for it to be offered to a core investor, a move which Iseghohi was said to have resisted, explaining that the request had to be tabled before the board before any decision could be made.

ThisDay also gathered that BPE had allegedly sold off the headquarters of NITEL in Wuse Abuja for an undisclosed sum. The issue of the headquarters and other properties of NITEL had caused a dispute with Transcorp, owners of Nitel with 51% equity on whether the property should be classified as core assets or not.

The slow speed with which the ownership of Nitel is being resolved leaves the company bleeding to death as its competitors will now have more time to attract away unhappy customers. The longer the BPE leaves the resolution of this problem, the less the asset will be worth. The only small ray of hope was that last week Vodafone expressed interest in entering the Nigerian market but would it buy Nitel?

This Day