NIGERIAN CONGLOMERATE TRANSCORP BUYS NITEL FOR $750 MILLION
Federal Government last week sold 75 per cent of national carrier, Nigerian Telecommunications Limited (NITEL) and its mobile arm, MTel to Transnational Corporation of Nigeria Plc (Transcorp) for $750 million (N1.1 billion) through negotiated sale process. The financial obstacle that upset the last round of bidding is now out in the open (see Nitel story below).
The deal is underwritten with soft loan money from Europe. Transcorp said it has secured EU 1 billion (about N170 billion) credit from the European Union Development Council at four per cent interest.
Director-General, Bureau of Public Enterprises (BPE), Irene Chigbue, said with the 75 per cent offer made to Transcorp "all liabilities/debts will remain with NITEL, except personnel related issues such as pensions liabilities and costs associated with downsizing which the government will assume." The pension liabilities are the skeleton that came tumbling out of the cupboard last week. Chigbue said the remaining 25 per cent still with government will also be sold soon.
Transcorp, wholly Nigerian owned conglomerate was incorporated in 2004. Last year, it pulled off a major deal by buying the NICON Hilton Hotel, Abuja which it now renamed Transcorp Hilton. Led by Dr (Mrs) Ndi Okereke-Onyiuke, Transcorp made up of some influential business people is into capital market, shipping, agriculture, oil and gas and telecommunications.
Onyiuke explained that Transcorp will not keep the 75 per cent of NITEL to itself as it will next month (August) start the initial public offer (IPO) to allow Nigerians buy into Transcorp and owe part of NITEL. She also disclosed that the remaining 25 per cent with the government will before November this year be put up for the public to buy and that Transcorp will give the government all the support it need to speed things up.
She disclosed that Transcorp already has secured a one billion Euros loan and will be injecting additional $1 billion (US dollar) within the next two years to increase NITEL capacity as well as aggressively build out its networks.