NITEL, Mtel Sold: Skye Bank Chairman, and others Now New Owners

A consortium run by Skye Bank’s chairman, Olatunde Ayeni, the founder of Sahara Energy, Tonye Cole, and two other companies, have received the nod from the Nigerian government to take over the country’s moribund, but potentially lucrative telecom carriers, NITEL and MTEL, once they pay $242.3 million (about N42.4 billion).

The investment vehicle, NATCOM Telecommunications, on Wednesday emerged the sole bidder for the Nigerian Telecommunications Limited, NITEL, and its mobile subsidiary, the Mobile Telecommunications, Mtel.

NATCOM has as members NATSPACE Telecommunication Investment Limited, PCCW Global Limited, Prime Union Investment Limited, Olutoyi Estate Development & Services Limited, Legal Resources Alliance & Co., Sahara Energy Resources Limited, and LM Ericsson Nigeria Limited.

Of the seven firms, Mr. Ayeni, profiled as a businessman and lawyer on Skye Bank’s website, owns three.

He is the founder and operator of Prime Union Investment Limited, Olutoyi Estate Development & Services Limited, and Legal Resources Alliance & Co. There are suggestions that he has link with NATSPACE.

Mr. Ayeni is leading NATCOM in its acquisition of NITEL/MTEL less than two months after he similarly led Skye Bank to buy Mainstreet Bank from the Assets Management Company of Nigeria, for N120 billion.

In 2013, Mr. Ayeni was the chief promoter of Integrated Energy Distribution and Marketing Company Limited, a group that eventually bought the Ibadan and Yola electricity Distribution Companies, DISCOs.

Mr. Cole is the owner of Sahara Energy, while LM Ericsson is a subsidiary of Swedish group, Ericsson.

NATCOM, which merges the seven firms, appears to a new corporate entity created solely for the purchase of NITEL/MTEL. Very little is known about the consortium.

If the group pays the agreed N42.4 billion to the government, it would be a successful sale that comes after four failed attempts by the Nigerian government to dispose of NITEL.

It however remains unclear whether the N42.4 billion offered by the consortium represents the real value of the telecommunication carriers.

NATCOM emerged winner after NETTAG Consortium, another little known group, was disqualified for failing to attach a $10million bid bond to its bid submission as stipulated in the Request for Proposals (RFP) to prospective bidders.

The RFP requires that 30 percent of the bid price be paid within 15 days of notification to the bid winner, while the balance would be paid within 90 days.

The bid would still have to be subjected to the approval of the National Council on Privatisation, a requirement that appears more of a formality as Wednesday’s bid process was organized by the Bureau for Public Enterprises, BPE, and supervised by the NCP.

At the commencement of the exercise, NATCOM made an initial offer of $221million for NITEL and MTEL.

But the NCP technical committee chairman, Atedo Peterside, who was represented by his deputy, Haruna Sambo, rejected the offer.

The company reviewed its offer to $252.251million, which was immediately declared acceptable.

“I am happy to announce that the resized bid has met the reserve price,” the chairman, Mr. Sambo announced.

According to Mr. Sambo, following the disqualification of NETTAG Consortium, only NATCOM Consortium’s financial bid was considered qualified.

He said apart from submitting a valid bid bond, NATCOM’s technical bid proposal scored an average of 92 per cent, which was considered above the minimum pass mark of 75 percent.

Nigeria started the process of privatising the national telecom groups in 2000 as part of the government’s reform of the telecommunications sector.

However, four attempts and a management contract aimed at repositioning the firms ended without success.

In 2001, the government tried to sell 51 per cent equity to Investors International London Limited (IILL) as the strategic core investor.

There was also the failed management contract by Pentascope in 2005, the aborted Orascom Telecoms bid in 2005, and the strategic core investor sale through negotiated sale strategy to Transcorp that was cancelled in 2009.

The last effort was the strategic core investor sale in 2011, where New Generation Communications Limited and Omen International emerged preferred and reserved bidders respectively.

Following the last failed attempt, Mr. Sambo said the guided liquidation strategy approved by the NCP was adopted.

BPE director general, Benjamin Dikki, said the NCP was faced with numerous challenges, including outstanding unpaid terminal benefits of ex-staff of NITEL/Mtel, arrears of salaries of retained staff and outsourced security as well as accumulated unpaid license and other fees to the National Communications Commission (NCC).

The Minister of Communications Technology, Omobola Johnson, said the privatization of the government-owned telecoms companies was the last segment in the reform process in the country’s telecommunication sector, which commenced since 2000.

She said the Federal Government would continue to fine tune policies to provide enabling environment for the growth and development of a private sector-driven telecommunications industry.

Mrs. Johnson said the liberalisation of the sector in the last 13 years attracted new investments valued at over $32billion entirely from the private sector, resulting in over 130 million subscribers compared to just 750,000 previously.