Nigeria invites bids for Nitel and mobile unit MTEL

Friday, Mar 20, 2009

Nigeria invited fresh bids on Thursday for a majority stake in its former telecoms monopoly Nitel, eight years after it starting trying to privatise the ailing firm.

Nigeria's Bureau for Public Enterprises (BPE) said in adverts in the local and international press that it was offering a 51 percent stake in fixed line operator Nitel and 100 percent of its wholly owned mobile unit MTEL.

Africa's top oil producer first tried to sell the troubled telecoms company in 2001, but the preferred bidders failed to pay the $1.3 billion price by the stipulated deadline.

Local company Transcorp bought 51 percent of Nitel for $500 million in August 2006, but the firm's infrastructure had deteriorated so badly due to corruption and mismanagement that Transcorp could not raise the cash to turn it around.

"The Federal Government of Nigeria and Transcorp Plc have agreed to select a new core investor who would have the requisite operational, managerial, technical and financial resources to take over NITEL and MTEL," BPE said.

It said interested investors must be reputable telecoms operators with 2 million fixed or GSM telephone lines, a track record of expanding a telecoms network and a minimum net worth of at least $500 million.

It said the deadline for bids was May 4.

Nigeria has overtaken South Africa as Africa's biggest mobile market with more than 62 million subscribers, according to the Nigerian Communications Commission.

The Nigerian telecoms market as a whole generated $8.4 billion in service revenue by the end of 2008, up 23 percent year-on-year, industry research group Pyramid Research said.

In a report published this month, it forecast that, with a mobile penetration rate of just 42 percent and a population of 150 million people, the strong growth was likely to continue.

Such figures have attracted the attention of international telecoms firms seeking to bolster their African presence.

South Africa's Telkom is selling its 50 percent stake in mobile phone operator Vodacom, which will provide it with a war chest of more than 10 billion rand, which it wants to use to become Africa's leading fixed, mobile and data service provider.

In November last year, Vodafone Chief Executive Vittorio Colao said Nigeria could be an interesting market for the mobile group, noting it was one of very few such large markets with a decent GDP, young population and "the classic conditions for being interesting for Vodafone".

Last year, Vodafone bought 70 percent of Ghana Telecom.

A senior executive at South African mobile phone operator MTN's Nigerian unit told Reuters on Tuesday the company could make further acquisitions as it grows in Nigeria.

Nigeria has struggled to find credible investors for Nitel, which is heavily indebted and whose fixed line customers have fallen to less than 100,000 from five times that figure in 2001.

MTEL subscribers have fallen to a few thousand from 1.3 million amid fierce competition since Transcorp took over.

Nigeria came close to selling Nitel in late 2005 to Egypt's Orascom Telecom, which had experience in countries with infrastructure problems, but rejected the firm's $256.5 million offer as too low.