Federal Government Seeks New Investors for Nitel/Mtel in Nigeria
The Federal Government has embarked on a search for new investors in Nitel and Mtel to improve its dwindling fortunes. In a meeting with Transnational Corporation (Transcorp) last December, government made clear its position that it wants to get another investor to salvage the telecoms company.
The Government said this was to redress the worsening condition of the company, a year after Transcorp took its operations. This decision was contained in a resolution at the end of the meeting made available to the News Agency of Nigeria (NAN) in Abuja yesterday. The resolution indicated that both parties agreed to divest a percentage of their equity in the company for a new investor.
"There is the need for a new core investor who is an industry player with a focus, technical expertise, managerial experience and financial capacity to turn NITEL/Mtel around" it stated. The Federal Government currently owns 49 per cent shares in the telecoms company, while Transcorp controls 51 per cent after paying N63 billion (US 500 million dollars) in November 2006.
With this resolution, the government is to relinquish 24 per cent of its holding to the new investor and retain the remaining 25 per cent . "Transcorp is to relinquish a maximum of 27 per cent out of its 51 per cent holding to the new operator/investor in order to make up the 51 per cent needed to give the core investor majority ownership," the resolution said.
The officials said the memo to the president entitled "Re: Unmerited Six Months Tolerance of Transcorp's sloppy Management of NITEL/MTel" catalogued about 32 areas that Transcorp did not meet. The officials said Transcorp had failed to meet up its Post Acquisition Plan of NITEL/ Mtel, which envisaged an infusion of N8.9 billion working capital loan to turn around the company. They said Transcorp had also not met the repayment of N15 billion interconnection debt to local and international network operators. Transcorp had also not been able to pay four months salary to Nitel workers who had all been on probation for over a year, without promotion or increment.
It identified "Incessant changes and disagreements between board members and top management in Transcorp as a major factor leading to instability in strategy and programme implementation" the officials said.