New Generation Telecoms bids US$2.5 billion for Nitel

The New Generation Telecoms consortium has been announced the winner of 75 per cent of Nigeria’s state-owned incumbent Nitel, with the bid of US$2.5 billion. The consortium comprises Nigeria’s GiCell Wireless, a relatively unknown telecoms firm within in the country, China Unicom as technical partner and Dubai’s Minerva Group. The consortium has 10 days to pay 30 per cent of the fee and a further 50 days to pay the balance if it is to secure its stake in Nitel.

The shareholding up for offer includes Nitel’s mobile arm Mtel and its fibre-optic cable division SAT-3, which links Africa with Europe and the rest of the world.

The other bidders were led by Omen International Limited (BVI), a company registered in the British Virgin Islands and which was announced the reserve bidder with an offer of US$956.98 million, more than US$1.5 billion below New Generation’s bid.

The others named include Brymedia Consortium which bid US$551 million, AFZI/Spectrum Consortium and MTN Nigeria Communications, which bid US$25 million for SAT-3 only. MTN Nigeria Communication and local mobile operator Globacom were previously excluded from bidding fully for the ailing incumbent.

The government’s privitisation move has received criticism for not learning from mistakes of the past, and opening up too much to foreign investment.

The federal government sold a 51 per cent stake in Nitel to local conglomerate Transcorp in 2006, retaining a 49 per cent interest. Since then the telco’s initial 500,000 fixed lines in service had dropped to about 45,000, and racked up a significant amount of debt.

In February Transcorp was made to start divesting its shareholding in the telco and in March the Bureau of Public Enterprises (BPE) announced it was offering a 51 per cent stake in the fixed line operator and 100 per cent of its mobile unit. In May Nigeria’s anti-corruption police charged the head of Transcorp, Tom Iseghohi and two other employees with fraud for allegedly embezzling around US$110 million belonging to Nitel, revoking the sale of Nitel to Transcorp altogether.