Crisis at Transcorp worsens…Tom Iseghogi Management Style worries stakeholders

The storm at TransCorp Plc, the blighted corporate contrivance …continue here.

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.

BETRAYAL! WHY OTEDOLA, DANGOTE FALL APART

The prospect of Mr. Femi Otedola and Alhaji Aliko Dangote engaging in direct business competition is already exciting Nigerians across the economic strata.

Until about two months ago, Otedola and Dangote have been known to be buddies in both the social and business senses. A source that had trailed the relationship between the two observed that though Dangote had had preeminence in the nation’s economic sphere before Otedola, but as soon as Otedola emerged in the big league of business owners about six years ago, he and Dangote became a pair both in public places and business alliances.

 In the early days of Transcorp, Otedola and Dangote were on board of the company, positioned back then as Nigeria’s answer to the dominance of the multinationals. Perhaps the most high profile business alliance between the two was the Blue Star Consortium, a special acquisition vehicle the two had used to acquire controlling stakes in the Port Harcourt and Kaduna Refineries. The acquisitions, were, however, revoked soon after Alhaji Umar Musa Yar’Adua assumed the office of the nation’s president.

Beside, though Dangote is known to be the face of Obajana Cement Company, a cement manufacturing concern propositioned to be the biggest in production capacity in Africa, Otedola, his friend has also been mentioned to be part of Obajana in terms of stake holdings.

But now, it would seem that the business collaboration between the two may have been put under pressure arising from what sources close to the very moneyed men describe as betrayal of trust.

 “I think it all has to do with the battle to acquire Chevron Plc, the downstream arm of Chevron Oil and Gas in Nigeria.” A source close to the two said. “Of course, you know by now that Femi had an intense interest in the acquisition of the company. The benefits to him were obvious, if he had acquired Chevron, he would have become the indisputable dominant operator in the downstream sector of the oil and gas industry. He would have merged Africa Petroleum, (a downstream behemoth in its own right after it was merged with Zenon) with Chevron Plc. With the two you can only imagine Femi’s competitive edge in the market place” The source revealed.

“Before the divestment of Chevron Oil and Gas from Chevron Plc was made public, Femi had apparently got information on the move and had shared his desire to buy Chevron with his friend, Dangote. I know that initially, Dangote was all in support of the scheme by Femi to acquire. But that was until Sayyu Dantata came into the picture.” The source said.

Sayyu Dantata, aside being a former business protégé of Dangote, is also related to Dangote, so it would seem natural that the balance of emotions by Dangote would tilt in favour of Sayyu.

“As it turned out, I am not too sure if Femi thought along that line. At least, he and Dangote had been at the Chevron thing for a while so there would have been no suspicion of Dangote’s shift of loyalty. So as the negotiation and bidding for Chevron proceeded, Femi constantly updated on his next moves and strategies. As issues evolved, he got to know that Sayyu’s MRS Group, the company that eventually won the bid was always outflanking him. The long and short of it is that there is the suspicion that Dangote might have availed his cousin, Sayyu of information Femi had shared with him.”

The same source said there had been a confrontation between the two where Dangote explained that Otedola could not have expected him to go the whole hog with him in consideration of his (Dangote) relationship with Sayyu.

“You know these people are matured men, you don’t expect them to bring their small fights to the public place, what I know is that Femi has decided to review and locate any opportunity in the economic space that enable him contribute to the economic advancement of the country. So all these talks about Femi taking on Dangote in competition by deciding to go into establishment of cement manufacturing plant is principally about expanding his business horizon. It has no direct bearing on the role Dangote played in the bid for Chevron.” The source explained.