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| Mike Adenuga |
Business magnate Dr. Mike Adenuga has made overtures to the federal government to acquire the state-owned telecommunications company, NITEL and its mobile subsidiary, MTel, for $450 million under the willing buyer-willing seller basis to be undertaken by the Bureau of Public Enterprises, in a last ditch effort to sell the troubled telecom firm.
In the last 10 years, the BPE has made five unsuccessful attempts to privatise NITEL, the last of which was a 2009 tender when New Generation Limited and Omen International emerged the preferred and reserve bidders respectively but failed to pay for the enterprise despite repeated extensions granted both firms to do so.
The failure to transfer NITEL to a private sector investor has made the company lose market share to more aggressive competitors and led to the erosion of its subscriber base from about 500,000 fixed land lines in 2001 to about 100,000.
Its mobile subsidiary, MTel, which once boasted 1 million lines, only has a handful of subscribers left on the network today.
The last botched attempt to dispose of NITEL compelled the BPE to write to the presidency and NCP seeking their approval for either the liquidation of the telecom firm or its disposal to an investor under the willing buyer-willing seller basis.
The federal government is said to be averse to liquidating NITEL and has settled for the willing buyer-willing seller basis for selling the telecommunications firm, but BPE is said to be waiting for the ratification of the National Council on Privatisation to proceed with the transaction.
The willing buyer-willing seller negotiated basis is a process that allows the BPE to receive tenders for an enterprise and hold negotiations on the terms and conditions of a sale with a prospective bidder or bidders until an agreement is reached that is suitable to both parties.
But sources in the presidency informed THISDAY that Adenuga, who has never concealed his desire to take over the company, has written a letter to the presidency indicating his preparedness to hold negotiations with the BPE and NCP to buy the company.
Adenuga, it was reliably gathered, made an impassioned plea to the presidency reminding it of his track record in the telecommunications sector as the Second National Operator, and his ability to turn NITEL around.
Adenuga, who is the executive chairman of the country's second largest telecom operator by subscriber base, Globacom Limited, is said to have made an initial offer of $450 million for controlling interest in NITEL, with a commitment to inject an undisclosed amount as working capital into the company to revamp and upgrade its network.
Adenuga is also said to have informed the presidency in the letter that NITEL will not be acquired by Globacom, but by a special purpose vehicle which will run distinctly from Globacom.
As part of his strategy for NITEL, Adenuga is also committed to taking the company to the public through an initial public offer that will broaden the shareholder base of the company.
A presidency official conversant with Adenuga's proposition explained that the letter has been received by President Goodluck Jonathan and minuted to Vice President Namadi Sambo, who doubles as the chairman of the National Council on Privatisation.
He disclosed that the $450 million is well below the federal government's expectation for NITEL, but the presidency is not losing sleep over it since they know the offer is subject to negotiations and possibly took into cognisance the magnitude of the company's liabilities currently put at N300 billion.
This will be Adenuga's second attempt to acquire NITEL in less than three years. In 2008, Globacom tried to participate in the bid round for the company but was disqualified by BPE after it was advised by the Nigerian Communications Commission that none of the major telecom operators could bid for NITEL as a whole.
To prevent the emergence of a very dominant operator and engender competition in the telecoms sector, NCC held that MTN, Globacom and Zain (now Airtel) would not be allowed to participate in the privatisation of NITEL, except they bid for its component units.
Based on the regulator's directive, MTN bid for NITEL's Sat 3 sub-marine cable, but Globacom went ahead to bid for NITEL/M-Tel as a whole, leading to its disqualification from the process.
The presidency official said that Adenuga is conscious of the regulatory hurdles he would have to overcome since his company Globacom is licensed as the Second National Carrier, and is the reason he is using an SPV that is distinct from Globacom.
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The official revealed that despite regulatory concern over his acquisition bid, Adenuga also knows he will most probably have the edge over other bidders since no serious operator is likely to express interest in the government company.
"You can see the calibre of investors who have submitted bids for NITEL in the last five or six years. Most of them are gamblers without the resources to pay for the company or inject capital to turn it around.
"That is why all the transactions have failed. May be the federal government would have to be more realistic by settling for someone with the technical capability and financial wherewithal to take NITEl off its hands," he said.
Irrespective, industry analysts who spoke on the issue, acknowledged that Adenuga is likely to encounter stiff resistance to his acquisition bid, no matter how well intentioned.
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