Sunday, July 17, 2011

Nigeria - NITEL is worth USD 2 billion, despite five failed attempts to sell the operator

[Daily Trust] The moribund Nigerian Telecommunications Limited (NITEL) should not be sold less than $2 billion by the Federal Government, a telecom engineer, Engineer Titi Omo Ettu has said.

Engineer Omo Ettu's assertion came in view of complaints by some Nigerians that prospective buyers are scared away from NITEL because of its high cost.

The government had made five attempts in the past 10 years to sell NITEL to core investors, and all had repeatedly run into hitches.

In 2001, Investors International London Limited (ILL), made an attempt to acquire NITEL, but defaulted in paying the bid price of $1.317 billion and lost the attempt.

Orascom also attempted to acquire NITEL with $256.5 million but lost the bid to Transcorp, which acquired NITEL for $500 million.

New Generation emerged the preferred bidder with an offer price of $2.5 billion during the opening of financial bids for the telecoms privatisation held on February 16, last year in Abuja.

It was expected to pay $750 million being the 30 per cent bid bond, but it failed to pay even after several extensions granted it by the privatisation agency.

The company was followed in the bid process by Omen, who emerged the reserved bidder, with an offer price of $956,996,091. Another company, Brymedia emerged third with $550 million.

But Engr. Omo Ettu said yesterday in an article published in his online magazine, cyberschuulnews, that "the First National Operator (FNO) license that NITEL was (still 'is') holding should be auctioned while NITEL as a business concern is wound up and save the country the embarrassment of a consistently failing process.

What I see as the retained value in NITEL all along had been the worth of the FNO license whose estimation is actually a rigorous evaluation process but which we did and found to be $2.2 billion."

He said the Bureau of Public Enterprises (BPE) under-valued NITEL because it valued only tangible assets and not FNO license.

"If NITEL does not have a very viable Right-of-Way all across the country, the worth may be significantly lower than that figure. Something tells me that those who are in charge of our privatization are not conscious of the real assets of NITEL especially the Right-of-Way and they might just have been working as if it is the equipment, buildings and its human resources that constitute the assets. It is therefore easy to write off all these as haven perished", he said.

'NITEL Should Not Be Sold for Less Than U.S.$2 Billion'

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