‘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