By Shina Badaru

Abuja. August 17, 2008. The Federal Government plans to transfer stakes in pioneer national operator, the Nigerian Telecommunications Limited (NITEL) to Investors International Limited (IIL), the London-based consortium that had in 2001 made a botched $1.317 billion bid to buy the telecoms company.

Technology Times checks reveal that government’s plans to cede about 7 per cent shareholding of its 49 per cent stakes in the company may not be unconnected with the outcome of international legal battle waged by the business promoted by businessman, Bode Akindele.

Lately, battle for control of stakes in the nation’s pioneer telecoms company has intensified following what is perceived as inability of current core investor, Transnational Corporation (Transcorp), which was sold 51 per cent of NITEL to reposition the telecoms company to compete in the new wave of telecoms revolution set off by the introduction of commercial mobile telephony services in August 2001.

Ahead of the planned concession to IIL, President Umaru Musa Yar Adua had approved a major proposal to also grant 15 per cent of government’s 49 per cent stakes in NITEL to the Nigeria Communications Satellite Company Limited (NigComSat) while also allowing the government-owned satellite bandwidth service provider offer direct service to subscribers.

Akindele’s ILL had in 2001 been offered 51 per cent stakes in NITEL in a bid codenamed “Flagship Transaction” by government privatisation agency, the Bureau of Public Enterprises (BPE) as part of measures to complete the liberalisation of the hitherto monopoly telecoms sector in Nigeria.

ILL’s higher offer over rival bidder, the Telnet Consortium, was to run into stormy waters when the consortium, a mix of Nigerian shareholders and Portugal Telecom, failed to raise the balance of $1.317 billion, within regulatory time frame set to close the deal.

ILL which had paid 10 per cent of its $1.317 billion winning bid through a combination of $100 million loan from First Bank and its shareholders faced challenges in raising the balance within the stipulated period based on what analysts reckon as the general recession in the global telecoms sector following the auctions of new licences and what was perceived as “cautious approach” to investments in Nigeria by the international investment community after the period following years of military governance.

Meanwhile, Technology Times sources say that hopes have brightened for IIL following the commendable strides witnessed in the mobile telephony market and the new disposition of government to transfer stakes in NITEL may emerge in the next few days.
In a related development, NigComSat’s planned foray into last mile service raised dust a few months back when the Nigerian Communications Commission (NCC) refused granting a licence to the publicly-owned satellite service provider to offer direct service to subscribers.

Following the row sparked off between both organisations, the Presidency had set up a committee headed by Vice President Jonathan Goodluck to recommend measures aimed at resolving the issue.

Recommendation of the Goodluck Committee has been approved by his boss. When implemented, the President’s approval will also see the satellite company’s Board being headed by a private sector professional while government continues to retain 100 per cent ownership of the company. NigComSat was formed to market capacity on the country’s communication satellite, NigComSat-1, launched into orbit May 2007 by China’s Great Wall Industry Corporation.

Through stakes in NITEL, NigComSat, it was understood may also eye the potentials available to leverage capacity on SAT-3, the international submarine optical fibre transmission link. SAT-3 built by a consortium of national operators and private companies and marketed on the Nigeria end by NITEL has been considered as largely underutilised for its potentials in providing transmission capacity for diverse telecoms services. NITEL’s exclusivity on marketing the optical fibre link to other operators has so far expired.

The pioneer national operator, NITEL, is at the centre of a fresh round of privatisation under which a bid has been thrown open for a strategic core investor hoped revamp the telecoms company. Transnational Corporation (Transcorp), which acquired 51 per cent stakes of NITEL has been unable to turn the company around, a development that has made both parties, government and the former, reach a deal to cede some of their shareholding to a new core investor hoped to return the company to profitability.

Transcorp had originally in 2006 launched a bid for 75 per cent shareholding in NITEL and its mobile business unit, Mtel including the bundled SAT-3, the Nigeria end of the undersea optical fibre transmission link built by a consortium of big international telecoms companies and other investors including NITEL. It was offered the package at $750 million during the privatisation sale undertaken by the Bureau of Public Enterprises (BPE). Transcorp, which was only able to raise $500million out of the final offer price, eventually settled for 51 per cent while government retained 49 per cent.

Under the new deal, both parties say they have agreed to relinquish enough shares to give comfort to a new core investor “in the best interest of the industry, stakeholders and the Nigerian people” with Transcorp ceding 29 per cent of its current shareholding while government will dispose 22 per cent of its to give the new core investor 51 per cent.

Following the flagging fortune of NITEL, after Transcorp acquired controlling stakes in the telecoms company, both parties resolved it was necessary to bring in a new core investor with, “requisite focus, technical expertise, managerial experience and financial capacity to take controlling shares in NITEL/M-TEL.”

Meanwhile, ahead of the President’s recent approval, NCC had in March this year granted an International Data Access (IDA) licence to NigComSat, bringing holders of the 10-year licence to 11 companies.

NCC, says “the scope of IDA licence shall include the right to provide voice and data services and full interconnection to Public Switch Telephone Network (PSTN)”, seeing by analysts as indications that NigComSat may soon realise its vision of providing last mile service.

NigComSat had lately sealed partnerships with companies like DigiTech, Linkserve and Digicell in a move seen as advancing its plans to offer end-user services through its satellite capacity.

Under its joint venture with DigiTech Broadcasting Limited, the Nigerian signal carrier distributor will use bandwidth on NigComSat for its digital broadcasting operations. Both organisations plan to provide direct-to-home (DTH) services to Nigerians and broadcasters, including free-to-air and pay television.

Under its partnership with Nigerian Internet Service Provider, Linkserve, in partnership with U.S.-based ViaSAT, NigComSat is providing bandwidth for cost-effective broadband service across the country, says Chairman, Linkserve, Chima Apugo Onyekwere, in the wake of the MoU signed by both organisation earlier in the year.