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New owners of Nitel, Mtel, face a tough road to success

Michael Malakata | Dec. 9, 2014
It's been a long road to the NATCOM consortium's $252 million acquisition of Nitel and Mtel, but there's also a long path ahead as the group tries win back public confidence and compete with private operators that have dominated Nigeria's telecom market.

It's been a long road to the NATCOM consortium's $252 million acquisition of Nitel and Mtel, but there's also a long path ahead as the group tries win back public confidence and compete with private operators that have dominated Nigeria's telecom market.

The Nigerian government's sale of the state-owned Nigerian Telecommunications and its mobile arm, Mobile Telecommunications, ends a decade of bickering over the sale of the company. NATCOM beat out other companies that were interested in buying Nitel, but the group's leadership has not said how it intends to revamp the company, whose infrastructure is obsolete and has been rundown for years.

Nitel assets acquired by NATCOM include licenses and spectrum, the nationwide fixed wire networks, the international gateway, towers and transmission equipment.

Nigeria's Bureau of Public Enterprise (PBE) launched a tender for bids in June this year after the process was cleared by the Federal High Court. In October last year, Nigeria's lawmakers passed a motion in the House of Representatives to block the sale of the company, insisting that Nitel was still viable and able to compete with private operators. The lawmakers asked the Nigerian government to establish a public-private partnership for the company.

But after months of infighting, the motion was overruled. Two bidders, NATCOM and NETTAG, had been prequalified by the BPE to participate in the liquidation process but NETTAG was disqualified for failing to include a $10 million bid bond as was stipulated in the Request for Proposal (RFP) prepared by the privatization agency.

After being announced winner of the bid, Tunde Ayeni, chairman of the NATCOM Consortium said "with the post-acquisition plan, the fortunes of the telecom company will be turned around in three years."

Whether the company can turn around in such a short time, and how exactly it will try to do that, remains to be seen.

Computer Society of Zambia telecom analyst Amos Kalunga said the growth of voice market in Nigeria is steadily slowing down, leaving operators to compete more aggressively on the provision of data services.

"So we expect the aggressive rollout of data services by NATCOM as opposed to voice services if it is to become relevant to the Nigerians once again," Kalunga said.

Corruption by senior government officials involved in the privatization process as well as lack of transparency and bickering among lawmakers and politicians were blamed for unsuccessful previous attempts to sell the companies.

Nitel was viable when the Nigerian government operated it as a monopoly, providing both mobile and fixed services.

However, problems started in 1992 when the government started liberalizing the telecom sector to allow private investments.

The coming of privately owned, technologically advanced and financially strong GSM operators including MTN, the region's largest operator, and Airtel, the region's second largest operator, ended Nitel's monopoly and the company started losing business.

 

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