• Saturday, May 25, 2024
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BusinessDay

Sale of NITEL

Re-inventing NITEL’s privatisation

There are now conflicting and confusing reports over the position of the Federal Government on the future direction of the Nigerian Telecommunications Limited (NITEL). Most of the reports have centred on whether the government will go ahead and conduct another privatisation exercise for the telecoms firm that will lead to private owners having majority stake or whether government has now decided to keep it in one form or the other.

There are many options within these broad categories and the government must be mulling over which it considers best for the future of NITEL. Under plans to privatise, the government may want to consider a public private plan and a management contract under public ownership and control. Some of these options are not now clear to the government because the government has not made clear the goals it seeks to achieve with NITEL. While some options of public ownership and control may seem attractive, it is instructive to note that firms such as NITEL have failed under public control and they will fail again if genuine, serious and pragmatic privatisation is not accelerated. The revocation of the sale of NITEL should not give the slightest excuse that these firms are better off in public hands.
Expectation that NITEL may fare better under public ownership and control will be misplaced. The expectation also that it is better to invest public funds to revive NITEL before it is sold will also be misplaced. The evidence of the failure of that approach is our refineries. If these inclinations are followed, they will mean a repeat of the government wanting to prove that NITEL is worth much than is generally believed. The best approach to see a telecoms firm’s worth is too see the economic impact a revived NITEL can make in Nigeria and sell to private investors that are prepared to make that happen. While it may take some time for that to happen, conflicting and confusing statement from the Federal Government will give the impression that it desires to keep the firm under public control. Under public control and ownership, we believe the investment and expertise needed for the revival of NITEL will always be elusive.

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The Presidency and the Bureau of Public Enterprises (BPE) officials are said to have declared that the government was no longer convinced that the privatisation was a viable means to revive the organisation. They said the government was not also ready to leave telecommunications solely in the hands of private operators. The government revoked the 51 per cent held by Transnational Corporation (Transcorp) Plc on June 1 and named a technical management board two days after. The new approach to the handling of NITEL is reportedly being embarked upon by the government to prevent the grave rot and loss that the continued delay in finding a core investor could have on the company’s infrastructure and progress.
Some of the problems that this new process will face, it is anticipated, include a fine-tuning of the rules for the new package, as well as finding credible partners. There is also the problem that a great deal of NITEL’s infrastructure is in disrepair and that the current value of the company has not been duly determined. For a network that has been down for the past three years, any information memoranda issued for the purpose of sale without powering the network will be misleading. A mandatory technical audit is needed to ascertain the state of the network infrastructure, its workability, repairability and serviceability.
Also, we do not agree with the notion of government not being ready to hands off the telecom business.
Given the exigencies of the time and the peculiar situation with NITEL, we agree that government needs to act fast, as the hour is getting late. We will advise under the circumstances also that government minimise its shares in the evolving entity, so as to make for best practices and generate public confidence.
As to the viability of the business, although the country’s teledensity level is increasing geometrically, with over 60 million subscriptions at last count, NITEL still has good prospect with its carrier status and its vast physical infrastructure which can roll out fibre-optic enabled landlines which deliver the best voice and data service and cost much less than mobile lines which dominate the market today. For the company to be successful in the long term though, the handlers must figure out ways to raise funds and enter into partnership with organisations which have technical competence, for without these, it will be bogged down.