Vice President frustrates Transcorp’s plan to sell off NITEL’s Backbone

The nation’s Vice-President, Goodluck Jonathan has, according to sources, stopped moves by the board of directors of Trans National Corporation (Transcorp) to reduce the net worth of Nigeria Telecommunications (NITEL), the national telecommunication carrier in which Transcorp 51 per cent holdings have remained an unending hassle in the Federal Government privatization of former national assets and companies.

The Transnational Corporation of Nigeria secured the purchase of the Nigerian Telecommunications Limited and its mobile arm, Mtel, on Monday, July 03, 2006 for a fee of about $750m.

However, Transcorp paid only $500m of the amount pledged, as it could not come up with the balance of $250m.

The $750m represented the 75 per cent equity holdings that the Federal Government intended to divest from NITEL to the core investor. The remaining 25 per cent was to be sold to Nigerians through a public offer latest in November in 2006. This, however, never happened, as Transcorp could not meet most of the terms of the contracts.

Close to two years after the acquisition of the 51 per cent holding in NITEL, Transcorp was yet to actualize the intentions of the sale of the majority stake in NITEL, the Federal Government under the presidency of Umaru Yar’Adua, successor to the Olusegun Obasanjo’s presidency that superintended the sale of the NITEL shares to Transcorp, in February 2008, reversed the sale of NITEL and its mobile subsidiary, Mobile Telecommunications Limited to Transcorp.

In the immediate aftermath of the announcement of the reversal of sale of NITEL to Transcorp, confusion ensued over the true position of the Federal Government; eventually it was clarified that since Transcorp lacked the requisite technical and financial capacities to manage and successfully rejuvenate NITEL and Mtel, it (Transcorp) and the Federal Government that still holds 49 per cent of the shareholdings would cede 27 per cent and 24 per cent holdings respectively in NITEL to a new core investor.

However, as the nation awaits the announcement of Transcorp successor core investor in NITEL, Transcorp was reported to have floated a special purpose company; the Nigerian Telecommunication Backbone Company Limited. The company was intended to be used to buy out the telecomm-unication backbone of NITEL by way of stripping the telecommunications company’s assets before the cessation of the majority holdings in the company is concluded.

Communications experts explained that success of this sell-off would have put the main operational sphere of NITEL in the purview of this so called Nigeria telecommunication backbone company.

“The company would have inherited NITEL’s main telecommunication platform which may include the SAT 3, the fibre optic and CDMA platforms,” an industry expert said. “These are the platforms that the whole gamut of the Nigerian telecommunication industry still depend on, so if Transcorp arrangement was successful they would, in fact, be transferring a stripped entity to whoever succeeded in the bid to become the new core investor,” the expert reasoned.

Mr. Jonathan, the Vice-President, who is also the Chairman of the National Council on Privatisation, the office on which the ultimate responsibility for the supervision of the privatization processes rests, was reported to have thwarted the move to sell NITEL’s backbone.

“The promoters of the company had successfully persuaded some Nigerians and foreign investors to be part of the Nigerian Telecommunication Backbone company, but when they brought the issue to the attention of the Vice-President he insisted that the status quo must be maintained. This means that nobody is allowed to dispose off any assets or rights that belong to NITEL or Mtel until a new core investor in the company emerges,” a source close to NITEL, confided.