Federal government has began the process of selling its stake in Nigerian Telecommunications Limited (Nitel) as the National Council on Privatization (NCP) has approved the advertisement for Expressions of Interest by core group/strategic investors to acquire 51% equity stake in the Nigerian Telecommunications Plc (Nitel) and its mobile arm, M-tel.
This follows extensive consultations and negotiations between the NCP/BPE and Transnational Corporation (Transcorp) on one hand and other stakeholders to begin the process of engaging a new core investor with the requisite technical, managerial and financial resources to take over the management of Nitel from Transcorp, its current managers.
The NCP, chaired by Vice President Goodluck Jonathan, took the decision at its 57th meeting held on Thursday, February 26, 2009, in Abuja.
To be prequalified, prospective investors must be reputable telecommunications operators with track record in the telecommunications sector. They should also possess verifiable evidence such as, at least two million fixed or GSM lines installed by one or more telecommunications companies that the strategic investor operates or controls; proven track record of expanding a telecommunications network of fixed or mobile lines; a minimum net worth of at least US$500 million; and where the prospective investor is a consortium, the operator must own at least 51% equity in the bidding vehicle.
It would be recalled that in 2006, the Federal Government sold 51% stake to TranscorpP Plc and retained 49%. The shareholders mutually consented to re-structure the current shareholding and admit a core investor who will buy a 51% stake in the company.
The 51% will be contributed by both the Federal Government and Transcorp Plc. To accomplish the government’s objectives, the BPE and Transcorp had earlier obtained the services of an advisory consortium comprising financial, legal, marketing, accounting, technical and valuation advisers to advise it on the privatisation process.
Consequently, a consortium led by BNP Paribas/Eleda Capital Partners was engaged to, among others, review the operations of Nitel and M-tel and prepare information memorandum. The consortium would also prepare valuation reports that will give an indicative base price for the enterprise as well as prepare draft contract documents and all other transaction documents required for an open, transparent and competitive bidding process.
The consortium would also be expected to market Nitel/M-tel to prospective investors and assemble all documents required in hosting data room. It will also evaluate the technical proposals submitted by prospective core investors and advise the NCP accordingly and prepare a comprehensive post-transaction report for Council.
Council also approved the setting up of an Advisory Committee on Nitel transaction. The Committee which is headed by the Chairman of its Technical Committee, Mohammed Hayatu-Deen, with membership drawn from BPE, Transcorp and NCP Chairman’s Office is expected to make definite proposals to the NCP on modalities for resolving all issues which may hinder a smooth transaction process
As part of its assignment, the Advisory Committee was directed by the NCP to work with Transcorp to deploy more human resources in the Accounts Department of Nitel to ensure speedy completion of Nitel/M-tel audited accounts in time for the transaction.