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‘Save
NITEL Now or Let It Die Completely’
Mother
hen and her chicks
Mother
hen made a quick dash to the back of the hut where her chicks
were innocently having a field day feeding on insects and
ants, oblivious of the danger that lurked. Mother hen made
a sound the chicks have instinctively become familiar with,
for it spells danger and warns of imminent death unless the
chicks run for cover – under the wings of mother hen,
who knows the predatory intrigues of the kites and hawks.
And, these predators were already flying over the area this
moment. Mother hen has to protect her chicks – even
at the risk of her own life. It is so natural. By MKPE ABANG
To save the living dead
Like
mother hen, the Nigerian government senses perhaps for the
first time in a sincere and caring manner, the predators hovering,
no, already eating at her own chick, the Nigerian Telecommunications
Limited (NITEL), and is about to make what may, just may,
eventually save this chick that has remained a chick at adulthood
because of attacks by predators who often come in many attractive
and gaily garments.
Now,
it is either swim or sink; for there is no other option for
the NITEL. It has tottered like a toddler for too long. After
many a struggle, some of which have been as disastrous as
they come, culminating into disgraceful exits of supposed
experts and the entry of others, who also turned out to be
mere harvesters of what others had sweated to sow, the battle
to save NITEL from total extinction is at its fiercest.
From
an aggressive and indeed frontal attack by government, which
seems to have seen through the mesh of deceit, lies and falsehoods
woven around the company by those who should be giving it
life, to the staff, who, after several years of toiling, are
not about to let their legacy go to ruin, NITEL could emerge
from the rubble a better company if, and only if the current
offensive by government is taken decisively and swiftly.
The
battle to save NITEL from imminent extinction, for it has
since collapsed, is like the battle between mother hen and
the vicious kites and hawks. The one knows how it has battled
to lay the egg, watched it hatch and now wants to nurture
the chick to full bloom; the other, not caring what the former
had gone through, only wants to take the chick for a good,
quick meal. It is the epic fight between the agents of progress
and sustenance and those who are mere speculators and profiteers.
The
Transcorp Conundrum
It happened like a real puzzle. On November 17, 2004, a company
was put together, in a manner some say was hasty, with the
sole aim of acquiring other companies and, as was expected,
turning them into mega profit making organisations. After
all, it has happened somewhere before, in Asia; it was therefore
a model most recommended.
Here
is the Transcorp mantra: “Our vision is to create a
globally competitive conglomerate, which will supply world
class products and services to local and global markets.
“Our
mission is to serve the global markets with premier products
and services from world-class production facilities based
in Nigeria and managed by Nigerians.”
Well,
Transcorp seemed well on the way to achieving what its promoters
had designed for it when in December 2005, it paid $105million
to the Bureau for Public Enterprises (BPE) for 51 per cent
equity in NIRMSCO Properties, owners of the Hilton Hotel.
The hotel would subsequently be re-christened Transcorp Hilton.
Apparently
in following up with that track record, Transcorp made yet
another big catch: on November 14, 2006, three days short
of one exact year after it paid for the hotel, Transcorp signed
a Share Sales and Purchase Agreement with the BPE for the
sale of NITEL. But if that sale was celebrated as perhaps
the biggest deal for the company, it is turning out to be
the biggest headache for the company on acquisition drive.
If the hotel is not so difficult to run, NITEL and its mobile
subsidiary, which has also passed into the hands of Transcorp,
requires much more technical, financial and human resource
commitment to keep it both alive and competitive.
A
memo, a meeting and an agreement
Alhaji Umaru Musa Yar’Adua, President of the Federal
Republic of Nigeria, is not a frivolous person. He is not
one to bend the rules to suit this or that person. Let the
law take its course, is a familiar phrase the president of
Blackman’s most populous country uses quite often when
tricksters would try to rope him in one controversy or another.
But now he has a major assignment on his hands, on which he
must act decisively yet promptly: NITEL.
Why,
after all these years, would this baby of the Nigerian government,
not grow into an adult? Why would this company, which has
the first mover advantage over all other telecom operators
in the country, not be celebrating several feats of rising
subscriber base in the now unstoppable telecom revolution
in Nigeria? For, it is true that several other players, who
came in much, much later, have now become so dominant in the
sector that their achievements practically dwarf anything
NITEL could dream of.
On
January 22, 2008, at a time when the president was still worrying
about budget issues, a memo was fired to his office, by the
Minister of State for Information and Communications, Alhaji
Ibrahim Dasuki Nakande. The minister’s memo, titled
“Status Report on the Post Sale Situation of NITEL/MTEL
to Transcorp,” was in reply to the President’s
directive on January 18, 2008 on the subject matter. Since
that memo, things have not been the same again between the
government and Transcorp regarding NITEL. And for good reasons
too.
In
that memo, which was like opening the Pandora’s Box,
Alhaji Nakande reeled out the ‘sins’ of Transcorp
in the management of NITEL/MTel, and went on to invite the
President to set up a technical board to be headed by the
Information and Communications Minister, among other recommendations.
Alhaji
Nakande hinged his recommendation on the fact that Transcorp
has transgressed “all” the provisions of the Share
Sales and Purchase agreement.
Schedule
3 of that agreement requires ‘compulsory implementation
of a post acquisition plan by Transcorp, a plan which Alhaji
Nakande argued, the purchaser has failed to execute.
In
his background to the comments in that memo, Alhaji Nakande
wrote:
“On
14th November, 2006 BPE and NITEL signed Share Sales and Purchase
Agreement between and among themselves to close the sale of
NITEL to Transcorp with and based on conditionalities to implement
NITEL/MTel post acquisition plan within 30 days and 100 days
of the take over of NITEL/MTel by Transcorp. The Post Acquisition
Plan was to commence the transition of NITEL/MTel to a profitable
and strategic telecommunication operator.
“The
negotiated sales strategy adopted in selecting Transcorp by
the BPE, generated criticisms from Nigerians who claimed that
the whole issue was devoid of transparency and fair play.
The sales rules were bent to enable Transcorp pay after reneging
on initial payment agreements.
“Transcorp
undertook the burden of NITEL’s liabilities but this
excluded the payment of staff pension and costs associated
with downsizing which was born by government. About 7,000
out of the 11,000 workforce of NITEL were sacked under the
negotiated core investor sale.
“Transcorp,
which is less than three years old with no experience of operating
a telecommunications network, was established in November
2004; it was modelled after the Chaebols of the South Asian
economies, particularly the Korean example. Prior to the NITEL
transaction by Transcorp, it had brought from the government
a 51 per cent stake in Abuja Hilton in 2005.”
Giving
a blow-by-blow account, Alhaji Nakande spelt out all the “critical
activities” under the NITEL and MTel Post Acquisition
Plan, which Transcorp ought to implement, but which it failed
to.
For
instance, under “Operational Liquidity,” the company
failed to implement the “Infusion of N8.9 billion working
capital loan upon take over;” it also failed to achieve
the return of revenue generation to the fourth quarter of
2005 “based on network operational improvement and revenue
assurance led by BT specialists based on generated bills to
date;” it failed to collect N60 billion owed NITEL.
Transcorp
also failed to achieve any set targets in Planning and Procurement
as enshrined in the post acquisition agreement plan. These
plans, which it failed to achieve, include managing $300 million
commercial liabilities with BPE, payment of N15 billion interconnect
debts to network operators – local and international
– to allow NITEL to grow traffic, defray balance debt
using SAT 3 in lieu of cash within 90 days.
After
reeling out the litany of ‘transgressions,” Alhaji
Nakande wrote further:
“It
is obvious from the above that there is a failure of implementation
and in execution by Transcorp in the compulsory NITEL/MTel
post acquisition plan signed by Transcorp. Consequent upon
Transcorp’s failure to implement schedule 3 of the share
sales and purchase agreement encompassing the compulsory NITEL/MTel
post acquisition plan, the following became manifest in Transcorp’s
ownership of NITEL/MTel:
a.
Withdrawal of British Telecom from the technical service agreement
it had with Transcorp quoting lack of working capital and
issues with corporate governance;
b. Incessant changes in Transcorp board members and top management
in both NITEL and Transcorp leading to instability in strategy
and programme implementation;
c. Disagreements between board members over the network expansion
programme for MTel
d. Transcorp’s inability to raise money from the capital
market due to poor subscription during its recent IPO, which
was only 36.2 per cent subscribed;
e. Transcorp’s mounting debt to the banking syndicate
that lent it $500 million for the acquisition of NITEL
f. Also, Transcorp, in addition to sacking thousands of staff,
has consistently failed in making regular payments of salaries
to the remaining 4,000 staff, presently all NITEL staff have
not been paid salaries/allowances for the past four months.”
This was of course, the position as of January 2008, when
that memo was written to the president.
The
minister stated categorically:
“Therefore,
NITEL’s sale to Transcorp has failed to achieve most
of the objectives of the privatisation and commercialisation
programme (as contained in the privatisation guidelines).”
With
particularly heavy emphasis, the minister stated:
“The
Public Enterprises (Privatisation and Commercialisation Decree
1999 Part VI (Miscellaneous) section 34 states: ‘Strategic
Investor means a reputable core investor or group of investors
having the requisite technical expertise, the managerial experience
and the financial capacity to effectively contribute to the
management of the enterprise to be privatised.’”
And
he averred:
“From
the foregoing, Transcorp on its own cannot be considered a
strategic core investor as it lacks the focus, technical expertise,
management experience and financial capacity to turnaround
NITEL and make it into a world class company.”
Not
one to point at failures without pointing the way forward,
Alhaji Nakande gave his recommendations, when he stated further:
“These
failures by Transcorp have resulted in NITEL/MTel losing subscribers,
unable to attract new investments to build up and maintain
the network that will result in increased market share, demoralised
NITEL/MTel workers as one year after the takeover no staff
has been confirmed to a permanent appointment resulting in
continuing loss of experienced and competent employees.”
It
was all this that led the minister to hold a meeting with
Transcorp and other top officials on December 11 and 17, 2007
with a view to finding solutions to these mounting problems.
And that meeting produced the need for a “new core operator
investor that is also an industry player with the requisite
focus, technical expertise, managerial experience and financial
capacity to turn NITEL/MTel around from the present situation
to a viable and profitable world class company.”
Already,
Telkom South Africa, Orascom of Egypt, Vodacom, also of South
Africa and France Telecom have shown interest in the new arrangement
for NITEL/MTel. It was reliably learnt that another company,
Bry Media, with Mr. Adrian Wood, former chief executive officer
of MTN Nigeria, as its CEO, has also signified interest in
taking over NITEL.
The
minister of state had however, recommended that the president
set up a “Technical Board” to be headed by the
minister to oversee the “concessioning of the diluted
shares to the new core investor/operator on a selective tendering
basis.” He advise further: “This option is informed
by the need to speedily address the sale within 90 days in
order to avoid the imminent collapse of NITEL whose effect
will affect the entire telecommunications industry in Nigeria.”
That was prophetic, as that warning came shortly before the
strike action by NITEL workers, whose effects were sorely
felt by all and sundry, including other telecom operators
and the consuming public.
Who’s
Transcorp’s Technical Partners for NITEL?
It is now almost 19 months since Steve Brookman, who BT seconded
to NITEL, under the Technical partnership agreement with Transcorp,
left Nigeria. Brookman, not ready to brook any complacency
on Transcorp’s part, left Nigeria on March 30, 2007.
Prior to Brookman’s departure, BT had written to Transcorp
asking the latter to make money available for the running
of NITEL or risk it (BT) pulling out. The money did not come
after the 30 days ultimatum; and the technical partner took
flight.
Yet,
in the FAQ on Transcorp’s website, under the question:
‘Who are Transcorp’s Technical Partners for NITEL’,
the answer on Transcorp’s website as of May 22, 2008
is still:
‘British
Telecoms (BT) is TransCorp’s technical partner in NITEL.
BT is one of the world’s leading providers of communications
solutions and services. The company operates in 170 countries
across the world. Its principal activities include networked
IT services, local, national and international telecommunications
services, and higher-value broadband and internet products
and services.
‘In
the UK, its home market, BT serves around 20 million business
and residential customers, as well as providing network services
to other operators. TransCorp’s choice of BT was based
on the success of its management to turn a formerly government-owned
monopoly faced with serious competition as the UK telecoms
sector was deregulated into one of the world’s most
successful telecoms companies.’
Also,
still clearly posted on its website is “Transcorp’s
strategy for turnaround of NITEL,” which it listed thus:
Since the Transcorp takeover of NITEL in November 2006 the
immediate priority has been to:
Optimise the value of the existing human capital; Carry out
a comprehensive audit of technical assets and repairs of salvageable
equipment; Reverse customer loss through improved customer
service and new products; Improve network reliability; Improve
bill collection processes; Implementing an effective internal
controls system”
The
company still says on its website that: “This stage
will last until 2008 when the second phase in the NITEL turnaround
will be launched. In the second phase, Transcorp will invest
heavily in new technology.”
The
signs are getting clearer
Between government and Transcorp, a recommendation has come
to the effect that 65 per cent equity of NITEL will be sold
to a core investor/operator, who will turn NITEL around. This
is a clear enough sign that Transcorp has failed in turning
around NITEL, the very reason the company was sold to it in
the first place.
By
the time another core investor/operator takes over the company,
Transcorp will have just 10 per cent while the government
will retain 25 per cent in trust for Nigerians. No one needs
a soothsayer to know that Transcorp has indeed lost grip of
the investment that should have been its cash cow for the
long haul. However, Transcorp should be happy if it does not
lose out of the NITEL deal altogether at the end of the day,
given all the ‘transgressions’ and the lack of
performance in the whole process. For the government however,
one stakeholder’s concern, which he could not keep to
himself, will continue to ring until the right steps are taken:
‘Save NITEL now or Let it die completely.’
Beyond Transcorp/NITEL Rigmarole
It seems obvious that government has finally woken up to confront
the monster that it has created by handing over NITEL to another
of its creation, Trans-National Corporation (Transcorp). For
the first time in a long while since the NITEL brouhaha has
been raging, the people who ought to know and have successfully
waded through the stormy waters of Nigeria’s infancy
with telecom, are speaking and pointing the way forward for
NITEL. Yet, there seems to be less truth from the management
of Transcorp, which has failed in nearly two years to turn
around the fortunes of the first national operator. By SEUN
IGBALODE
It
is difficult now to tell the truth from the numerous half-truths
and, in some cases, downright falsehoods that have trailed
national carrier, NITEL and its relationship with the Nigerian
mega company Transcorp. At every turn since 2006 when NITEL
was ceded to Transcorp, it would appear that only half truths
have been fed the worried Nigerian people over what is the
true state of affairs with NITEL and its mobile arm, M-Tel.
Each
media briefing or public statement made by Transcorp concerning
NITEL almost got a counter position from the workers of NITEL
who are supposed to be employees of Transcorp, insisting at
every turn that the company they work for cannot be worth
anything under the headship of Transcorp.
Transcorp
on its own part describe its position in not too pleasant
adjectives because at virtually every turn, it has to wait
in what appears an endless time for government to make up
its mind on any business decision that must be taken concerning
NITEL.
Although
government which ordinarily should not have a thing to do
with NITEL especially in this season of fierce competition
in the telecom sector in Nigeria has found it difficult to
disengage from the affairs of NITEL, unfortunately it found
a willing party in Transcorp which lacked the technical competence
to deliver on the important business of telecom service provision.
Thus,
in less than six years, NITEL has had to contend with another
manager that lacked the prerequisite technical skill and competences
to deliver a world class service. The first was Pentascope
which left NITEL sour and bitter than it was when the Netherlands
amateurs took over the reigns in NITEL.
Recent
confrontation between workers of the national carrier and
the management of Transcorp have further exposed to public
glare the extent of the rot in NITEL and its mobile subsidiary,
M-Tel. The combined number of subscribers of the two networks
presently stands at less than 70,000 and this number continues
to dwindle by the day. More than twice in the past, the workers
under the aegis of the Senior Staff Association of Communications,
Transport and Corporations (SSACTAC) and National Union of
Postal and Telecommunications Employees (NUPTE); have openly
called for the withdrawal of the equity ownership granted
Transcorp over NITEL by the Bureau for Public Enterprises
(BPE).
And
in the heat of the most recent strike action embarked by the
workers of NITEL last April, again the call was made that
Transcorp lacked the competence to manage the affairs of NITEL
and the workers encouraged the Federal Government to repossess
NITEL and invite a more competent investor to takeover the
company.
However,
a significant impact of the strike action was the near collapse
of the operation of many businesses and individuals users
in Nigeria who depend on the NITEL SAT-3 for their data traffic
and other uses. The striking workers simply switched off the
undersea cable and this rendered many users inactive with
its subsequent financial loss and heartaches. This action
ignited a wave of public demand that the submarine cable should
be excised from NITEL ownership to avoid a likely reoccurrence
of the episode.
What
is then left of NITEL if SAT-3 is removed from it? As proposed
at a recent agreement between the Nigerian government (it
holds 49 per cent equity in NITEL in trust for investing Nigerian
public) and Transcorp (the Nigerian company holds 51 per cent
equity in NITEL/M-Tel purchased for $500 million) to seek
for a new and competent partner to acquire majority equity
in NITEL, the question that has become readily asked is whether
NITEL without SAT-3 would be worth much to attract an investor
to the company? This picture is captured by telecom lawyer
and a key player in Nigeria’s burgeoning telecom industry,
Mr. Paul Usoro, SAN. According to the man whose first encounter
with NITEL was as a young lawyer fresh from law school in
the 1980s, “Well, I think the recent strike actually
showed everybody that the most critical asset that NITEL has
is actually that trans-continental cable network that it has
underground the sea. That is about the most critical asset
that it has. I’d say that that is the most critical
asset because when the NITEL workers went on strike recently,
literarily everybody that… had something to do with
information technology and telecommunications noticed the
impact of not having that cable functioning.
“The
only thing that you would sell and you would sell it at a
very reduced price would be just the licence that it has,
the mobile licence and then of course the SAT 3. If it goes
on the way it is going, there would hardly be anything worthy
of anybody coming to make a bid for.”
This
sordid picture painted by Usoro of a once thriving national
pride is held all around by key industry players with some
of them putting the blame squarely on government for playing
politics with a national asset and ever allowing NITEL to
get into the hand of an inexperience company like Transcorp.
Such former key NITEL staff like Chief Ezekiel Fatoye who
recently retired from the services of Multi-Link/Telkom where
he served as Executive Director from the inception of that
company in 1997, sees the government as the sole culprit in
whatever is happening to NITEL today.
Paul
Usoro seems to share in Chief Fatoye’s sentiment when
he says, “I think the key to sorting out NITEL is transparency.
Government itself has to be transparent; government has to
be determined that it wants to do something right, and the
process of trying to do it right, it must be very fair. And
it really must not subvert the process, and if it does not
subvert the process, it’s going to find it very easy.
Incidentally, they now have a partner. In other words, Transcorp
is there right now, NITEL is owned by Transcorp and owned
by government. So the critical thing is that the two parties
must agree that it is important to bring in another party,
and it must be a good party. What I would have suggested to
government would have been that there are some operators that
may be quite willing to come in. Nigeria is still a very viable
market and what you have to do is look for those companies,
negotiate terms with them and set targets, agree on certain
things, and negotiate good terms with them. This time I am
speaking from the experience that I have had in Celtel.”
This
position that the prospects look bright in the Nigerian telecommunications
environment despite the estimated 60 million subscribers that
the market already has, is affirmed both locally and on the
international scene. Recently at the just concluded Telecom
Africa held in Cairo, the Egyptian capital; it was unanimously
agreed that the country is still a virgin land seeking for
investors in the area of telecommunications.
Speaking
with IT &Telecom Digest in an exclusive interview, minister
of state for information and communications, Ibrahim Dasuki
Nakande informed that more than five companies have already
signified interest to takeover the affairs of NITEL as the
preferred shareholders. He is optimistic that this number
will continue to grow as the day goes by while the BPE continues
to fine tune its processes in preparation for another round
of bidding for NITEL which will bring to five the number of
times a competent company to manage NITEL has been conducted.
Even
though the number of interested companies continues to grow,
there are strong indications that the offering price will
not be as would have been expected if it were to be some years
behind. A couple of years ago, one of the leading operators
in the Middle East, Orascom had offered as much as $256 million
for the national operator but this figure was turned down
by the Nigerian National Council on Privatisation and the
National Assembly over what they describe as inadequate for
a company as big as NITEL.
It
was later to sell off a 51 per cent equity in NITEL to the
Nigerian conglomerate Transcorp at an impressive $500 million.
After the dilapidation and inactivity that has taken place
in the company since 2006 when Transcorp acquired NITEL, it
is becoming more glaring that a new buyer may be hard to come
by that will be willing to pay as much as Transcorp for the
same NITEL.
The
reasons are clear: no investor would want to pay so much for
a company with lots of liabilities and NITEL has a good load
of this including backlog of unpaid salaries running into
millions of dollars; indebtedness to other operators over
issues of interconnect and other contractual obligations that
it has not been able to fulfil due to its bad fortunes, among
others. These put together will make an investor think twice
before making a bid for the operator.
If
the liabilities of NITEL far outweighs its tangible assets
at the current market rate with the understanding that the
cost of technology has been consistently on the decline, then
the 65 per cent equity in NITEL that the existing two owners
(Transcorp and Federal Government) are willing to part with
may fetch far less than the $500 million Transcorp paid two
years ago.
Why
Did Transcorp Jump at NITEL?
Purely political is how best to describe the acquisition of
NITEL by Transcorp and indeed, it is also on the same basis
that the company itself was founded. Without any experience
in managing telecoms, the confidence that Transcorp could
weather the storm that has already gathered round NITEL was
the presence of a technical partner like British Telecom (BT)
which apart from its verse experience has been a business
partner with NITEL in the past. Indeed, most of the early
NITEL technicians were trained by BT.
In
spite of this BT expertise, the relationship crumbled just
one year into the Transcorp acquisition. This was after so
much hype has been made about the new relationship and key
BT officers appointed into key NITEL positions.
Till
date, no one outside Transcorp seem to have a clear picture
of what exactly went wrong in the Transcorp/BT arrangement.
It has unfortunately become part of the numerous half truths
that many industry watchers have accused Transcorp of feeding
the Nigerian populace concerning its management of the national
carrier.
The
politics of Transcorp played itself out almost as soon as
the company commenced operation. Most of its founding directors
announced their exit from Transcorp without making the reasons
for their actions public. Soon, the company relieved its managing
director, Bernard Longe of his position, an action most people
insist it is a fall out from his role in the botched IILL
purchase of NITEL. And in his place was appointed Tom Iseghogi
who like other Transcorp major appointments lacked experience
in managing a telecommunications outfit.
While
Transcorp announces that it has invested a handsome N5 billion
in NITEL since 2006, officials of NITEL insist that there
was no investment in the real sense of the word. They argue
that Transcorp was only taking money from SAT-3 and putting
it into NITEL. When reminded that this money came in form
of facilities from banks, they countered that any of such
loans were only obtained by Transcorp to offset the salaries
of their officials whom they claim earn stupendous salaries
and allowances.
There
are indications that Transcorp counted on government patronage
and support in the purchase of NITEL just like the company
was also at the behest of the former President Olusegun Obasanjo.
While president Obasanjo dreamt of a Nigerian company that
could raise adequate fund to buy up major stakes in oil and
gas, telecommunications, manufacturing, both within and outside
Nigeria; members of Transcorp were strangers drawn from the
different sectors of the economy without common interests
and vision. They soon scattered and the company was left to
meander its way through the stormy corporate world. Just to
confirm to the sceptical investing public that Transcorp was
a make-belief of the past government, its pioneer chairman
and Director General of the Nigerian Stock Exchange, Dr. Ndi
Okereke-Onyiuke made a public admission that she was ‘forced’
to assume chairmanship of the company when she did.
These
clearly indicated that the acquisition of NITEL was borne
completely out of political motive as against commercial interest
that is the driving force behind the operation of telecommunications.
Two
years after, Transcorp is still enmeshed in the same crisis
that heralded its formation and there is no love lost between
its management and the workforce at NITEL and its mobile arm,
M-Tel.
Should SAT-3 Be Left In The Hands Of NITEL?
Unarguably the most lucrative investment still left and quite
functional in the dormant expansive NITEL telecom empire is
the beneath the ocean cable simply named SAT-3. Recent events
in the affairs of NITEL have raised concern over the continued
retention of SAT-3 in the NITEL cache.
July 1994
The year was 1994; the nation was at the brink of collapse.
Turmoil has taken over the entire political landscape and
heavy cloud of conflict enveloped the air. Mass protests and
riots were some of the reactions that had greeted the incarceration
of Chief Moshood Abiola, purported winner of the June 12,
1993 Presidential elections. At the helm of affairs was then
Head of State, General Sani Abacha. Abacha ruled with iron
fist and from the onset, the general turned a deaf ear on
the mass criticisms by an obviously disenchanted populace.
The former Commander-in-Chief of Nigeria’s Armed Forces
was going about the business of governance unperturbed, he
could care less about the mass protests that trailed the call
for the unconditional release of Chief Abiola and revalidation
of the result of the June 12 election. Pockets of protesters
had started to form, and the threat of an uprising was evident.
The ‘bloody civilians’ ought to be cowed to obeisance,
if the need arises, by any means necessary, even if it would
cause some deaths; the late Army General must have thought.
In a true Machiavellian manner, after all, the end justifies
the means.
Members
of the civil society, sworn to defend democratic ideals and
averse to military dictatorship; had dared to openly express
their grievances had met a staunch resistance in the hand
of the military. So, many of them had fled the country, fearing
for their lives, lest they stopped bullets with their bodies,
going by author James Hadley Chase’s analogy. Their
fleeing the country was informed by another school of thought
that believes that he who fights and runs away, lives to fight
another day.
The other half of activists who possessed the courage, chose
to stay and confront the government; some employing guerrilla
tactics, others opting to confront the government head on,
without hiding their identity. They were however against two
strong odds. One was the power of incumbency; the other was
the type of government in power – military. Strikes
and protests scored minimal impact at the time in spite of
huge resources that went into mobilising the people. This
was not a normal kind of government and the times were equally
abnormal.
It
had started to become a tradition, that is the protests. Members
of civil society groups and organised labour would after meetings,
announce their intentions to protest against the government
through press statements. The government, usually through
the Police formations in the various states, will quickly
respond to the threat, reminding the intending protesters
of the government decrees banning mass action. And if they
must have one, then they needed a police permit. The Police
formations knew no one in his right senses would ever hand
out such permits allowing a gathering for the purpose of opposing
the Abacha junta. On the other hand, members of the civil
society knew that even a million of its applications for permit
to demonstrate no matter how peaceful it intends it, they
would be consigned to the garbage cans. The police would be
kind enough to warn of the consequences of the anti-government
protests. The end results were always empty canisters of tear
gas littering the streets, a group of angry protesters scampering
for safety and in some cases empty pellets as a result of
gunshots fired by the police.
The
Federal Government needed more than the serial protests, the
civil society must have thought. It needed to be brought to
its knees. One commodity happened to be common to all and
sundry; a product Nigerians, nay, the world cannot do without
– petrol, alongside its sister products kerosene and
gas. Civil society decided to hit the government where it
would hurt the most. The decision to get the National Union
of Petroleum and Natural Gas Workers (NUPENG) to go on strike
must have been tough for Mr. Frank Ovie Kokori, the Secretary-General
of the Union. But in dealing with an adamant government, they
were pushed to the wall, and left with absolutely no choice.
The civil society chose to fight back. And it chose to fight
back where it would hit government the most, the oil channels.
The
National Union of Petroleum and Natural Gas workers (NUPENG)
and the Petroleum and Natural Gas Senior Staff Association
of Nigeria (PENGASSAN), the central nervous system of Nigeria’s
oil industry, embarked on an indefinite strike intended to
coerce the government to relinquish power to a democratically
elected government. Its impact was devastating to state the
least. Movement of vehicles was paralysed following the unavailability
of fuel. Even the kitchen was affected as kerosene and cooking
gas were unavailable. Nigeria was taken back to the Stone
Age as the populace reverted to alternative methods of cooking,
making use of coal and saw dust. This got the attention of
government. Any strategy capable of crippling the economy
would certainly get the attention of government.
The
strike action led to the shutting down of Nigeria’s
refining operations, cutting crude productions by 20 per cent
and disrupting fuel supplies within the country. Labour’s
demand was encapsulated in the statement it made to the government:
“resolve the political crisis by respecting the democratic
and sovereign will of the people as expressed in the last
presidential elections. All democratic structures must be
restored and the winner of the election (Abiola) installed.”
The government replied by incarcerating Mr. Frank Kokori and
other labour leaders. It proscribed the activities of the
Union and appointed Military administrators to oversee their
affairs. The hostility of the government to civil society
notwithstanding, the strike action left a deep mark on the
government and its scar took time to heal, and its story is
told to this day.
April
14, 2008
The telecom industry had taken with levity the threat by the
National Association of Telecommunications Employees (NATE)
that the networks of NITEL, the country’s first national
operator and its mobile subsidiary M-Tel would be rendered
redundant as a result of the proposed industrial action to
be embarked upon by the company’s employees. The threat
by the workers to go on strike was regarded by the populace
as a domestic affair to be sorted out by the dramatis personae
viz: Transcorp and the Federal Government; the dual owners,
as well as the Bureau of Public Enterprises, the Ministry
of Information and Communications, the Ministry of Finance;
perhaps even the Nigerian Communications Commission and other
public and private enterprises which have vested interests
in the once dominant company.
The
indifference of the public towards the proposed strike was
plausible; only about 60, 000 Nigerians have dealings with
NITEL, this number of subscribers is what NATE says is the
combined strength of the two companies. It would also be argued
that a significant percentage of this number probably subscribe
to an alternative network as a back up to the NITEL/ M-Tel
network hence, the subscriber network casualty might be minimal
in the event of a strike action.
Earlier,
the government in February had reversed the NITEL sale to
Transcorp in response to the call by the Senior Staff Association
of Communications, Transport and Corporation (SSACTAC) and
the National Union of Postal and Telecommunications Employees
for the government to do so. The Unions’ plea to the
government to revoke the sale had been definitive, but their
intended course of action at that time was vague. But by April,
the first national operator’s workforce was bent on
pursuing the threat to a logical conclusion to press home
their demands primarily for the payment of their five months
accumulated emoluments.
Transcorp,
conscious of the consequences of the workers action to the
fortunes of the highly depreciated telecom operator had acquiesced
to meet the deadline set for the payment of the workers’
by raising a cheque for the payment of workers salaries before
close of work on April 14. “The agreement we reached
with them (NITEL employees) was that we’ll give them
N506 million on April 14. On April 14, we gave to NITEL management
N506 million as agreed” stated Mr. Tom Iseghohi, the
Chief Executive Officer of Transcorp at a press conference
confirming that the company adhered to the terms of agreement
reached with the employees on the payment of salaries.
But
the employees obviously versed in the principles of finances
were conversant with the fact that a cheque can only be cleared
after three working days. According to them, salaries were
not paid on April 14, the presentation of the cheque notwithstanding,
an action tantamount to a breach of agreement by Transcorp.
The workers would later state that parts of their grievances
were: “That item (1) on the communiqué was not
perfectly adhered to by Transcorp as the salaries were paid
on the 18th of April 2008 instead of the 14th April 2008;
although the cheque was issued to NITEL on the 14th of April
2008 by Transcorp.” They laid down their tools and embarked
on a strike action. But then the strike was all encompassing.
Not satisfied with abandoning their duty posts they seized
NITEL exchanges and shut down SAT-3, the Trans-Atlantic cable.
NITEL workers shut down major switches and transmission lines.
Not
only were subscribers to the NITEL and M-Tel networks inhibited
from making phone calls, the operations of other telecom companies
was hampered, which led to experiences of call congestion
on various networks and complete incapacitation of data users.
The shut down of the interconnection facility at NITEL’s
exchange in Lagos compelled the several telecom operators
to route their calls through alternative and more expensive
means. But the biggest discomfort to telecom operators was
the shut down and inaccessibility to the SAT-3 facility. Aside
offering about the cheapest and most affordable access for
bandwidth the facility is also used by network operators for
international gateway. Also reportedly affected were the seat
of government; security service agencies; media houses and
oil and gas giants like Shell and Mobil.
SAT-3
SAT-3/WASC or South Atlantic 3/West Africa Submarine Cable
is a submarine communications cable linking Portugal and Spain
to South Africa, with connections to several West African
countries along the route. It forms part of the SAT-3/WASC/SAFE
cable system, where the SAFE cable links South Africa to Asia.
The SAT-3/WASC/SAFE system provides a path between Asia and
Europe for telecommunications traffic that is an alternative
to the cable routes that pass through the Middle East, such
as SEA-ME-WE 3 and FLAG. SAT-3/WASC provides the only optical
fiber link between West Africa and the remainder of the world.
The
SAT-3 system together with SAFE was built by a consortium
of operators that currently has 36 shareholders in all. The
largest three investors in SAT-3/WASC were TCI, a subsidiary
of AT & T (U.S.A.); France Telecom (France); and VSNL
(India, Singapore). The 11 African shareholders are: Angola
Telecom, Camtel, Cote d'Ivoire Telecom, Ghana Telecom, Maroc
Telecom, Nitel, OPT Benin, OPT Gabon, Sonatel, Telecom Namibia
and Telkom SA Ltd.
The SAT-3 has landing points in:
1. Sesimbra, Portugal
2. Chipiona, Spain (though this landing is considered to be
part of the Telefonica domestic network)
3. Altavista, Gran Canaria, Spain; while in Africa, the landing
points are in:
4. Dakar, Senegal
5. Abidjan, Côte d’Ivoire
6. Accra, Ghana
7. Cotonou, Benin
8. Lagos, Nigeria
9. Douala, Cameroon
10. Libreville, Gabon
11. Cacuaco, Angola
12. Melkbosstrand, South Africa meeting SAFE
Although Telecom Namibia holds ownership in SAT-3/WASC, Namibia
has no landing point. Namibian internet users currently have
no access to SAT-3/WASC, because Telecom Namibia would have
to purchase capacity from Telkom SA, and due to Telkom SA's
high prices has so far refused to do so.
The cable itself consists of four fibres, using Erbium-doped
fiber amplifier repeaters and wavelength division multiplexing.
SAT-3 began operations in 2001, providing the first links
to Europe for West African internet users and, for South Africans,
taking up service from SAT-2 which was reaching maximum capacity.
SAT-2 had been brought into service in the early 1990s as
a replacement for the original undersea cable SAT-1 which
was constructed in the 1960s.
NITEL and SAT-3
The SAT-3 cable system is described as a technology and commercial
breakthrough of unparalleled significance for Africa as it
offers a faster and more efficient trading channel between
the continent and international markets. The estimated total
cost of the fibre optic project was put at $650 million; with
the Nigerian government, through NITEL, parting with $50 million,
about 20 per cent of the cost of its reserved digital mobile
licence. This guaranteed part ownership and access to the
resource for 25 years. The first national operator then in
turn offered these services to internet service providers;
broadcast stations, as well as other companies in need of
access to cheaper bandwidth and a less expensive international
gateway. The initial ominous sign of perhaps a bleak future
for the rugged resource was the initial refusal of the first
national operator, NITEL the custodian of the resource in
Nigeria to grant a co-ownership request by the second national
operator, Globacom. Globacom backed up its request for access
to the resource with action, sources stated with payment to
NITEL coffers in dollars. NITEL, in its wisdom, purportedly
after much delay decided it was best to refund Globacom’s
payment in Naira. Globacom further buttressed its request
for access to SAT-3 on the grounds that the submarine fibre-optic
cable was a national resource, but NITEL claimed that the
resource belonged exclusively to it. Globacom decided that
it was best it embarked on the building of its own fibre-optic
submarine cable.
Globacom
is currently building a fibre-optic submarine cable from Nigeria
across the Atlantic to the United Kingdom at a cost of $170
million. The project would compete directly with the SAT-3
fibre optic cable, in the custody of fellow national operator,
NITEL.
SAT-3
Debt
The payment of an estimated $50 million strategic investment
to be a member of the international consortium of owner-operators
of the SAT-3 cable system project notwithstanding, member
companies are required to make payments on traffic charges
generated on international gateway access. But NITEL was found
culpable of not remitting payment, necessitating a threat
by the consortium to cut of the telecom operator’s link
from SAT-3.
Bala
Ibrahim Abdulkadir, Deputy General Manager, Corporate Communications
for NITEL confirmed that the $4.5 million debt, ascribed to
NITEL for failure to meet payment obligations had accumulated
over the years. But then, it took a threat, and a resolve
to uphold Nigeria’s integrity before the debt could
be offset. The debt was offset through a shareholder loan
from Transcorp, NITEL’s parent company. This throws
up the question of what happens to the revenue generated by
the company.
SAT-3
Can Generate N19.2 billion
If any individual would know about the workings of NITEL,
it would be Engineer Ahmad A. Nahuche, immediate past Managing
Director of the first national operator, having been on the
saddle from June 2, 2007 till March 5, 2008, when he tendered
his voluntary resignation. Before the NITEL appointment he
was the Chief Technical Officer of Intercellular, one of Nigeria’s
earliest CDMA operators. He describes NITEL as the only body
“right now that provides international services”
by virtue of the SAT-3 resource. According to him, the submarine
fibre-optic cable was a huge source of revenue for the company.
In an interview session soon after his resignation, he said:
“We (SAT-3) have 64 highways and each highway is selling
at around N300 million. In December and January we sold around
three highways. And we are telling them that in the next three
months we are going to sell another four highways. Even if
we sell around 20 highways out of 64 at N300 million per annum
multiply that by 20 we are talking of around N6 billion. Which
is around N500 million per month,” he noted. Going by
his calculation, the 64 highways, estimated at N300 million
each would, if totally sold out, have a value of N19. 2 billion.
He
however stated that the management of Transcorp preferred
outsourcing the management of the SAT-3 resource to another
company other than NITEL. “Transcorp is saying that
they want to take this capacity for another company to run
for NITEL for a fee and we are saying we can do it ourselves.
There is no need to do bill operators and transfer. We have
qualified human staff in NITEL to manage these facilities.....It's
not a problem. NITEL staff can operate, manage and market
this capacity,” he noted.
Whither
NITEL Funds?
If the employees of the country’s first telecom operators
set out to teach the management of Transcorp a few lessons
in employee management, through the recent strike action,
the company also succeeded in establishing its relevance in
Nigeria’s telecom industry, no matter how infinitesimal.
Subscribers might not recall the last time they received a
phone call from a NITEL or M-Tel phone number; they might
not even remember what an M-Tel recharge card or SIM card
looks like; but service providers, mostly GSM companies and
internet service providers, felt the brunt of the SAT-3 shut
down. The company even succeeded in getting the attention
of the Nigerian Communications Commission, the telecom industry
regulator.
The
regulator’s spokesperson, Mr. Dave Imoko issued a statement
expressing concern “about the effects of the recent
strike embarked on by workers of NITEL, which has caused the
shut down of the company’s network. Also through the
SAT-3 cable infrastructure, NITEL provides a major international
link from Nigeria to the outside world. As a consequence of
the workers’ strike, subscribers who rely on NITEL’s
fixed lines would invariably resort to patronising other service
providers, thus increasing the congestion on those networks”
he said.
The
strike and its attendant consequences also caught the attention
of the Senate and House of Representatives Committees on Communications,
which had hitherto been pre-occupied with battling GSM operator’s
on the poor quality of service which has plagued the telecom
industry, and which the NITEL worker’s strike succeeded
in worsening. Senator Sylvester Anyanwu, Chairman of the Senate
Committee on Communications alleged that the NITEL strike
proved that the Board of NITEL received an average income
of between N500 million and N800 monthly from SAT-3 alone,
wondering where such huge earnings disappears into.
Honourable
Jerry Manwe, Chairman of the House Committee on Communications
also while speaking to reporters queried: “Who are the
GSM operators paying for the services of the SAT-3 facility;
is it the Ministry of Communications, Nigerian Communications
Commission or NITEL? We discovered that they (GSM companies)
pay money for the services. So who is collecting the money?
We cannot keep quiet while things are not done in the right
way” he stated, hinting that the House Committee on
Communications would soon commence a probe as to the whereabouts
of the revenue generated by NITEL.
‘Government
will intervene to save NITEL from total collapse’
‘Transcorp has violated all sections of the share purchase
agreement’
ALHAJI
IBRAHIM DASUKI NAKANDE, Nigeria’s Minister of State
for Information and Communications, is a very versatile man.
Not only is he versed in issues pertaining to the governance
of the sector directly under his purview as a cabinet minister,
he has the benefit of having been through the former government
monopoly, the Nigerian Telecommunications Limited (NITEL).
He lent his voice to the current debate on what to do to save
NITEL, in this interview with MKPE ABANG. Excerpts:
Question:
Could you educate us more on the Share Purchase Agreement
with Transcorp regarding NITEL, particularly whether the agreement
can actually still hold or whether it has been violated?
Answer: Thank you very much. I think one would not have wanted
to engage anybody over the fate of NITEL. But be that as it
may, I think we have an obligation and as stakeholders and
also citizens of this country to do whatever that is necessary
to, one, save NITEL. For obvious reasons, there are Nigerians
who are gainfully employed in that particular organisation.
And secondly also, there is a multiplier effect of their families
and loved ones also benefiting from that employment which
those good citizens of this country are in the present NITEL.
So I think that one major factor in the entire arrangement
is that whoever is the core investor in NITEL, or whatever
company that government is privatising, must also have a Master’s
Services Agreement with a technical and competent company
that will give them backup to enable the process to run optimally.
And in the case of NITEL, the core investor (Transcorp) signed
an agreement with British Telecoms and any violation of that
agreement would render the entire sale (of NITEL) and the
privatisation of the company itself a nullity. So British
Telecom had already withdrawn. That is the first violation
on the share purchase agreement which Transcorp signed with
the Bureau of Public Enterprises during the sale of NITEL.
The withdrawal of this technical partner is a violation; and
we have precedence. When in 2001, a certain company called
International Investment London Limited (IILL) bought NITEL
for $1.2 billion, and paid 10 per cent, at that time, the
technical partner was supposed to be Portuguese Telecoms.
And for some reasons which were not clear to us at that time,
Portuguese Telecoms said they were not coming to Nigeria as
the technical partners of IILL. And as a result of that, BPE
at that time stopped it and also nullified the sale. This
was in addition to IILL not raising sufficient funds to pay
additional money in line with the sales agreement. So, one
would have expected that BPE would have come in since April
last year; they should have stepped in and withdrawn the sale
from Transcorp.
BPE
has not done that up till now; why hasn’t government
asked BPE to do so?
I think it’s their responsibility. I don’t know
the reasons, but I hope that in due course, we will find out,
we will get to know why BPE has not stepped in to discharge
its responsibilities in this regard.
Honourable
Minister, Transcorp claimed that they have invested N5 billion
in NITEL. Are you aware of this, and if so, where do you think
they have invested this money?
I expect that you people should ask Transcorp where they invested
that money. Because for a fully technical company like NITEL,
obviously if you are making any investment, it should be in
the areas of operation that will also one, push up the level
of performance of the company and secondly expand its space
for revenue generation. But we are not seeing that. So I think
this question is best for Transcorp. Because if N5 billion
has really been put into this company, I’m sure the
story that has happened now in terms of the continuous haemorrhaging
of NITEL would not have happened.
There
are companies along the same line, companies like Globacom,
Visafone and MTN that are investing billions of dollars not
just naira. If Transcorp is talking of just N5 billion in
a company as huge as NITEL, if at all they put it, would that
be sufficient enough money to keep the company afloat?
Yes, if they had been able to invest it. But unfortunately,
they have not had the required amount of investment into the
companies. Many companies are doing far more with even less
expertise as it is. In NITEL there are a lot of good and well
trained engineers, technicians and so on that can even run
the company profitably on its own as it is. But this is not
to say that government is thinking of having any company to
run it. We now have a law in place and in line with the reforms
that the country is going through, obviously we are not as
a government interested in running any company. Government-owned
companies will continuously be privatised from time to time,
so that at the end of the day, our position is to allow the
private sector to push the space for growth for the country.
Even for now, what we are also doing is to also seek a public
– private partnership so that at the end of the day,
such government investments will now be taken over by the
private sector so that the country can run on that particular
line of economic strategy.
Talking
about Transcorp, if things continue the way they are, the
BPE has not stepped in, Transcorp does not seem to be doing
much, they are in violation of some of the agreements…
All! They are in violation of all expectations of the agreement.
Well,
you think we’ll come to a stage where the government
will now come in to be able to save this company?
Government has a responsibility. Because they’re saving
NITEL; they’ll be saving the entire sector. You saw
what happened during the recent strike action (by NITEL workers).
While we were busy complaining about quality of service, that
strike itself also made things worse than they already are.
I think that as a responsible government, we’ll be left
with no option than to step in. Really step in and stop this
maladministration that we are seeing even in NITEL. Because
the situation in NITEL is no different from what has happened
in Ajaokuta (Steel Company Limited). They (Global Infrastructure
(Nigeria) Limited (GIHL), the core investor) too violated
all the share sales purchase agreement; in fact in their own
case, they hadn’t paid and government had to come in
and stop the concession and then try to arrange with a company
to then subsequently start another round of privatisation.
There
are people who said that government was too kind to Transcorp;
that out of $750 million they were supposed to pay, which
represented 75 per cent, they paid $500 million, which was
the equivalent of 50 per cent, but they gave them 51 per cent.
Why was this concession?
I don’t know what has happened; I don’t know the
details but we’ll get to it in due course.
Now,
can you give us an idea, if government were to step in like
the Ajaokuta scenario, what would be the next direction?
I think the direction will be to save the company from total
collapse. And then start the entire process again.
Of
privatisation?
Yes, of privatisation. But mark you, we are already in agreement.
Government is in agreement with Transcorp that because they
do not have the technical expertise, they do not have the
funding; both of us are in agreement that there is the need
to call in a new core investor to take over the running of
NITEL.
What
is going to be the procedure for calling in this new core
investor sir?
We’ll start it all over again. We have the National
Council on Privatisation, the secretariat of that council
is the Bureau of Public Enterprises which is charged with
doing all the due process, due diligence on a company before
it is finally privatised in an open and transparent manner.
So they have already started. In fact, they have advertised
for a financial adviser who will help them to tidy up and
subsequently to get people to come and show interest, and
I want to assure you that I have received more than five international
companies who have shown keen interest in taking over NITEL
as it is. So the company is still very viable. The opportunities
for investors in the sector in Nigeria are still very, very
good. And NITEL certainly with the level of infrastructure
that it has across the country is a very good buy.
Talking
about this core investor thing, we are talking about people
who have shown interest. Are they going to come in as part
owners or management committee, or people who are to manage
the company; what is the arrangement?
No, we won’t go into that again. We’ve had our
troubles when government sometime ago gave NITEL to a company
called Pentascope; we know what has happened and we would
not want to put our hands and burn our fingers again. So whoever
is coming in will come in a very comfortable manner as a core
investor; and we will concede 65 per cent of NITEL to that
investor.
If
you concede 65 per cent, it means that between you and Transcorp,
that company becomes the majority, while the two of you become
the minority. How will government be able to wield any influence
under that arrangement?
Government does not want to wield a single influence in that
particular company because it would be fully privatised. Whatever
quantity of shares that are remaining which government is
holding, it will only hold in trust for some time on behalf
of the Nigerian people. At the end of the day when the company
finally settles down, these shares which will be about 25
per cent will be ceded to the Nigerian people through the
Nigeria Stock Exchange. Government does not intend to have
any influence on it once this company becomes privatised.
Our position in coming in is only to intervene as a stop-gap
to save the company from total collapse.
Which
means government will have 25 per cent, if that sale happens,
and Transcorp would have 10 per cent.?
Yes.
What
is the real position of the shareholding between government
and Transcorp at this moment sir?
At this moment, the company stands as it is. But as soon as
we get a core investor, we are selling 65 per cent to that
core investor.
So
right now it’s still 51 per cent to 49 per cent?
I don’t know. I don’t know how the whole thing
is right now, but all I know is that both government and Transcorp
have firmly agreed that there is the need to have a new core
investor. And government has approved that that new core investor
should have 65 per cent.
How
soon are we likely to have this sir?
As soon as possible; except that there are certain processes
which need to be done. And BPE I’m sure is already working
on that. And then you know we have to give some space also;
one for auditing, and secondly, when the companies now come
in to start showing commitment, the interest that they have,
it means now that they have to go through the books of accounts
of the company and do their own due diligence and know the
extent of the liabilities that they are taking on, and so
on and so forth. So that they can take a decision on the amount
of bid to put in for the company.
Obviously
one of the recommendations made for a company to come in must
be that they must bring in money into NITEL not just come
in?
Well, I think that they will all have their strategies. When
we say money, money could come in many forms. It could come
in form of equity; that is to say that by the time they are
doing their due diligence, they will determine, one, what
is the level of working capital that would be brought in,
and what is the level of additional equipment that will be
brought in so that they can have a quick grip of the company
before they finally settle down to look at their long term
investments.
If
NITEL were to have a very good company managing it, in one
year, what level of revenue do you think the company can generate?
In one year, because of the challenges, there are challenges
in other sectors of the economy, they will generate sufficient
amount of revenue to be able to at least break even in the
first year because the successes of other companies that we
have seen in Nigeria (in the telecom sector) even with the
estimated figure of 46 million connected lines, show that
for a country with the kind of population we have, 140 million,
it means that the climate is still very, very good for the
company. But everybody knows this, that’s why there
is the kind of interest that we are seeing; the list of people
who want to come into NITEL is growing by the day; our only
prayer is that the BPE will find a quicker and accelerated
way of completing this process.
Is
it going to be something like an auction which NCC did in
the time past?
What the NCC did was licensing; the BPE is doing bidding.
They have their ways, everybody bids and then when they are
opening the bids, it’s in an open place, the press is
there, everybody that is interested is there, and then as
soon as you bid, you come in with your bankers, and then when
the bids are opened, you have to make some payment of 10 per
cent of whatever is your interest as a commitment, and then
of course you will start to roll out.
Let
me ask one question on SAT 3. Some people have said that because
SAT 3 was bought with government money at that time, if it
is going to be a problem that NITEL, as a privatised company,
can go on strike tomorrow and hold the nation to ransom, why
not excise SAT 3 from NITEL and let NITEL run on its own and
then put another agency to run SAT 3. What do you say to that
sir?
I say no to that.
Why?
Because SAT 3 and NITEL are like two sides of the same coin.
You cannot excise one and leave the other. It’s not
a Cain and Abel kind of situation. They are together and we
will sell them together, and that is the end of it. Because
to remove SAT 3 now from NITEL would tantamount to removing
the heart out of NITEL. And then it will collapse. That is
the strength of the company. That is the area where a lot
of people are showing interest in, because of the convergence
in the industry or in the sector, or in ICT. In fact, any
company that is doing voice, without a data content or internet
content on the same voice line, is going to lose out in the
next two years, because everybody is going to have this convergence,
triple play – voice, video and data.
You
mentioned some banks earlier. Transcorp took the money they
paid for NITEL from some banks. If tomorrow, the decision
is taken that Transcorp is not doing enough, and we are no
longer interested in the agreement, will government pay back
this money to those banks?
NITEL is not a government owned company. These loans were
taken to pay for the company by Transcorp and then secondly,
probably to use some as some of the working capital. I’m
sure those people who are showing interest now, when they
come in, in the course of doing their due diligence to find
out the state of the company, not just only the technical
part but also those other issues of management, of indebtedness
and other unseen liabilities, they will be in a position to
know; with that kind of information they will now determine
what level of funding they will put into the company. It has
nothing to do with government.
On
a last note sir, NITEL is number one, but NITEL is the last.
What exactly do you think is the problem with NITEL?
There’s no problem, it has already been privatised.
I’m
speaking like a Nigerian now, this is a company that ought
to have been number one there, but it’s like the one
at the end of the line now. The question is, what do you think
has been responsible for NITEL not really running as fast
as even those who came yesterday?
You know when the de-regulation came NITEL had run for close
to 50 years as a monopoly. And so with deregulation, at that
time even the NITEL management did not foresee that this deregulation,
when we started having fixed wireless companies coming in
at that time, the private telephone operators (PTOs), NITEL
did not have a vision to see that this competition is going
to come to this particular level. So there was no re-orientation;
there were no strategy programmes on change to see the changes
that were coming in. So at the end of the day they became
complacent, and the revenue position was being taken away,
and they were not moving with time. And then of course globalisation
had come in, that had made government being in business no
longer tenable, and therefore there was the need also to start
some form of privatisation. Initially, you know when NITEL
was formed in 1985, later when there was commercialisation,
they were allowed to fix their prices, government stopped
giving them funding and the rest of it. But from the management
point, they didn’t see it coming. That was why we came
to this particular level. But we have still seen that in spite
of all these, the company itself is still very, very relevant
to the sector. In spite of all you are seeing, all these people
digging and the rest of it, they still do not have the level
of backbone infrastructure which NITEL still commands. They
are all trying, but again, it is gradually taking away business
from NITEL.
It is Obvious that NITEL doesn’t have the funding it
requires - Usoro
PAUL
USORO is without a doubt, Nigeria’s leading telecommunications
lawyer. He made the record books when he became the youngest
lawyer to join the elite class of Senior Advocates of Nigeria
(SAN). A director with Celtel Nigeria, he was the legal adviser
to the former Econet Wireless Nigeria and has continued to
play a pivotal role in the development of the sector in Nigeria.
This legal icon is a critical factor in Nigeria’s transition
from a minor player in the telecom landscape to its current
position as Africa’s leading nation and one of the fastest
growing in the world. For the man who was involved in the
early stages of the country’s transition into a liberalised
telecom economy, he understands what it takes to reach the
top and how painful it could be to fail where it matters most.
One time legal consultant to NITEL, PAUL USORO sees potentials
in the operator, but this must be harnessed for it to be translated
into profit. Inside his tastefully furnished home in Lagos,
he spoke to the team of SEUN IGBALODE, DENNIS ONWUEGBU and
MKPE ABANG, on NITEL, moving the company forward, Transcorp
and other matters concerning this critical sector in Nigeria.
Excerpts:
Question:
What would you say is the most important resource or asset
of NITEL at the moment?
Answer: Right now?
Yes
Well, I think the recent strike actually showed everybody
that the most critical asset that NITEL has is actually that
trans-continental cable network that it has underground the
sea. That is about the most critical asset that it has. I’d
say that that is the most critical asset because when the
NITEL workers went on strike recently, literarily everybody
that uses, I wouldn’t say only telecommunication services
because telecommunications is rather restrictive, literarily
everybody who had something to do with information technology
and telecommunications noticed the impact of not having that
cable functioning, whether you’re using it for purposes
of data transmission or you are using it for purposes of well,
still referring to data; and telephony, basic telephony, everybody
noticed the impact. With regards to the other services that
NITEL used to provide, and that is basic telephony, one could
say with the strike, really one did not notice the impact
as much particularly the GSM operators being available, that
we could have access. It was possible for people to talk and
communicate; but in terms of international traffic, in terms
of data transmission using SAT 3; that became quite a problem.
So that seems to be the biggest resource, the best, the most
critical resource that NITEL has.
Now,
talking about that resource, do you think given the problem
that came up, do you think that it was right to keep that
resource in NITEL when NITEL was being privatised?
Okay. Now, that is a little bit of a difficult question. You
could look at it from different parts. One part that you could
look at is, this is a resource that belongs to NITEL exactly
the same way the different switches and other network infrastructure
that NITEL has. All of it came from public funds. Therefore,
if you’re going to privatise, which one do you excise
and which one do you keep for the purposes of that privatisation?
That is more of, in some parts a political question, in some
parts a commercial question. There is also the other issue.
If you think that one resource is very critical, and therefore
you should not put it in the hands of one person; what should
you do? Remove it and then create another parastatal to look
after it? Given the history of government being in business
and the very primary motivation why government considered
it necessary to move out of business. That creates a problem
on its own. Therefore, for me, it is not exactly as straightforward
as it is either black or it is white. Perhaps, there are two
ways of looking at it. A holistic picture into what does government
want to do with NITEL and how is it running? You want to privatise
it, have you done it right in a way that you get value, and
in a way that the services are provided. That is the whole
question on its own and it’s better to look at it from
that total picture. And then the second part of it is that
one can look at is if I have to compare it with other telecommunication
services, you could see that the liberalisation of the field,
making it possible for different other operators to come in
has helped very considerably. So, the other side of that same
question would be, would it make sense to liberalise and encourage
more people who can build this same type in conjunction with
a consortium, that can build the same kind of Trans-Atlantic
cable and in that way, you really do not have one person.
There are so many cables that criss-cross; so you could actually
have alternatives owned by different consortia, and that way
you really don’t have a situation that one person can
hold you to ransom. I would rather look at it from those two
broad perspectives, and say maybe that’s what government
really needs to look at more than should they excise, just
excise it completely. Let me also give you my own take on
it. It is similar to saying maybe you should excise SAT 3
from the assets, and then another person says, and by the
way, that first issue that I raised, maybe I should just revise
it a little bit. There is another resource that is critical,
and that is the mobile telephone licence that NITEL has through
Mtel. That’s a critical asset that is very underused
by NITEL today. You could see what the other operators have
done with the same kind of licence and there is another person
who has just come in, Mubadala, which tells you that if that
particular asset had been well utilised, it’s something
that it could make a lot of money from. So going back to the
issue of SAT 3 and whether you should strip the assets, some
persons will say, remove that one and put it quite separately,
it’s a critical resource and it’s very good and
another person says, remove the SAT 3. The question is when
you strip it, and you take it piecemeal like that, what really
remains? Do you have any reasonable asset that you could now
attract someone to come and buy? That’s the question.
The
other question I would like to talk about is Transcorp. It
paid 500 million dollars for what we are told is 51 per cent
of NITEL. They were supposed to pay 750 million dollars for
75 per cent. Which translates to every one per cent is about
10 million dollars. When they now paid 50 million, and they
got 51 per cent, how did the one per cent come in?
That’s a question for the Bureau of Public Enterprises.
We
are back to square one, so to say. It is almost obvious that
NITEL is at the brink of annihilation. How can we liberate
it and get it right?
I think the key to sorting out NITEL is transparency. Government
itself has to be transparent; government has to be determined
that it wants to do something right, and the process of trying
to do it right, it must be very fair. And it really must not
subvert the process, and if it does not subvert the process,
it’s going to find it very easy. Incidentally, they
now have a partner. In other words, Transcorp is there right
now, NITEL is owned by Transcorp and owned by government.
So the critical thing is that the two parties must agree that
it is important to bring in another party, and it must be
a good party. What I would have suggested to government would
have been that there are some operators that may be quite
willing to come in. Nigeria is still a very viable market
and what you have to do is look for those companies, negotiate
terms with them and set targets, agree on certain things,
and negotiate good terms with them. This time I am speaking
from the experience that I have had in Celtel. Celtel at a
time was really in need of a very good partner and then it
was Vee Networks. What they did was that they put in place
a process to get a good investor who was willing to put in
money and when that process ran its course quite transpare |