On October 8,
2016, ntel, Nigeria’s fifth mobile network and, according to their
website and social media platforms, Nigeria’s first pure play 4G/LTE
advanced network will celebrate 6 months since the commencement of
commercial operations on 08-04, 2016.
In those 6 months, ntel has attained
full network coverage in Abuja, across large swathes of Lagos and then
parts of Ogun, Nassarawa and Niger states. It has launched full VoLTE
services, signed a landmark deal with Samsung, perfected its selfcare
recharge via its website and practically changed the broadband landscape
with its superfast and unlimited data propositions.
But despite these chest thumping
achievements, ntel which is the trading name for NatCom Development
& Investment Limited, has been hounded and harangued on all sides by
traducers and nay sayers who have levelled all sorts of accusations at
the nascent entity.
And the emerging picture is one of shock
and bewilderment that a wholly Nigerian company could successfully
acquire and return the moribund Nitel/Mtel to business after 5 failed
attempts by more experienced entities like Orascom Telecoms of Egypt.
NatCom was among the 17 consortia that
participated in the guided liquidation process for the acquisition of
the assets of Nigerian Telecommunications Plc (Nitel) and Nigerian
Mobile Telecommunications Limited (Mtel) and was declared the preferred
bidder with a bid amount of $252,251,000.00.
As preferred bidder, NatCom paid 30% of
the bid amount on January 6, 2015, and the balance of the 70% was paid
on April 2, 2015. Completion of full payment of the bid price of
$252,251,000.00 gave NatCom the legal right to receive the assets of
Nitel and Mtel.
What was not immediately apparent to the
NatCom consortium was the moribund state of the assets they were going
to receive and the fact that they would need, as Kamar Abass, CEO of
ntel has noted in interviews, about $1bn to put them back in working
order.
In the past few weeks, there has been an
ongoing campaign by a group called Nigeria Association of Auctioneers
(NAA), which is calling on the Federal Government to revisit the sale of
Nigerian Telecommunications Limited (Nitel) and its mobile arm, Mtel,
to NATCOM.
The group is accusing the Bureau of
Public Enterprises (BPE) of lack of transparency. The BPE and the
Nigerian Privatisation Council (NPC) oversaw the guided liquidation
process that led to the emergence of NatCom as preferred bidder.
The NAA alleges that the BPE disposed of
the core and non-core assets of the old Nitel and Mtel without recourse
to open competitive bidding which it avers negated basic principles
that guide sale of government assets.
As a telecom industry stakeholder and
commentator, I have wondered why the NatCom acquisition of Nitel and
Mtel has raised so much dust. A few months ago, Dr. Olatunde Ayeni,
immediate past Chairman of NatCom had to defend his company in front of
the House of Representatives committees on telecommunications and
privatization.
His appearance at the house was predicated on a December 3, 2015, motion raised by Honourable Henry Nwanwuba Calling for an investigation of the Sales of Nigerian Telecommunications and Mobile Telecommunications (MTEL) to NATCOM. In his motion, the member of the upper house queried the liquidation, sale and takeover of Nitel/Mtel.
Following that motion, the House of
Representatives’ committees on telecommunications and privatizations
were directed to conduct an investigation into the BPE-led guided
liquidation of Nitel/Mtel and the subsequent acquisition of their
Telecom assets by NatCom. The committees were asked to report back to
the house in eight weeks for further legislative action.
The motion seemed to be focused on 4
specific areas – i) undervaluation of Nitel/Mtel; 2) balkanization of
Nitel/Mtel assets; 3) foreigners benefitting from the privatization
process & 4) review of the privatization process
Three months after Olatunde Ayeni
appeared before the house with a robust defence that put paid to the
matter, the NAA is raising further questions and the time may have come
to answer the questions raised.
I will focus on two of those: alleged undervaluation of Nitel/Mtel and review of the privatization process.
To answer the first question, one must
ask why was Nitel/Mtel sold via a guided liquidation process? The BPE
chose the guided liquidation process because of the huge debt and
liability profile of Nitel/Mtel. This was necessary because as Mallam
Nasir El Rufai pointed out recently at a stakeholders’ sensitization
conference on the Pension Reform Act 2014 for the North-West organised
by the National Pension Commission, “by 2001, a step was taken to sell
NITEL which was valued at $500 million. But NITEL’s pension liability
was N43 billion, it was a lot of money then in 2001 and N700 billion was
the total pension liability of the Nigeria Airways.”
The huge liability of N43bn, according
to figures provided by Mallam El Rufai, was a sore point for prospective
investors and it was a consideration of that huge liability that
informed the BPE and NCP’s decision to pursue a guided liquidation
strategy as had been successfully done in the case of National
Fertilizer Company of Nigeria which was sold and became Notore via a
guided liquidation process.
So, the sale of Nitel/Mtel, via a guided
liquidation, to NatCom is not peculiar. It has been applied
successfully before by the BPE and NPC in strict adherence to global
best practices and tested parameters after detailed financial analysis
and negotiations by the Bureau of Public Enterprises, financial advisers
and the consortium.
Now, another point to take into account
is the passage of time and attendant depreciation of asset quality. When
we consider the fact that the figure mentioned by Mallam El Rufai is 14
years old and then factor in depreciation, would it be far-fetched to
say that the true value as at 2014 was $252.2m (or N51.6 billion as
noted by Otunba Senbore, the court appointed liquidator during a recent
meeting with agitated creditors of the liquidated telcos at the
Transcorp Hilton Hotel, Abuja) which the NatCom Consortium bid and paid
for?
Otunba Senbore has noted at many fora that due process was followed diligently and to the full letter of the law.
The privatisation process is supervised
and facilitated by the NPC and BPE. The BPE designed the process while
the NCP approved it based on international best practice and almost 20
years’ experience garnered from other instances like the earlier
referenced National Fertilizer Company/Notore as well as the National
Sugar Company.
The Nigerian Communications Commission
(NCC) was invited in recognition of its constitutional role as regulator
of the telecom industry to vet the suitability of the applicants.
Out of the 17 companies that expressed
interest, NATCOM and NETTAG were selected to move to the next stage. The
two companies progressed to the “Request for Proposal” stage where a
$10 million bid bond was a prerequisite in the technical proposal.
During the opening process of the bid, NETTAG did not meet the bid bond
requirement, and its bid was not opened. At that critical stage, there
was a reserve price, but the turning point was that NATCOM eventually
offered to pay $252.251 million to emerge the preferred bidder.
Aside from BPE/NPC and NCC, the process
had an additional component; the appointment of Otunba Senbore as court
appointed liquidator in line with proper judicial process. An
accomplished chartered accountant and insolvency practitioner who
oversaw the process, Otunba Senbore was duly appointed by the order of a
court and was actively involved in the process from valuation to sale.
Infact, reports from the BPE also
indicate that the NatCom Consortium ended up paying an additional $6m
due to the staggered payment prescription and exchange rate valuations.
Six months down the line with subscriber
base growing daily alongside an army of happy and satisfied customers,
it is my humble submission that ntel deserves commendation and support
not antagonism and unnecessary scrutiny.
First, for bringing the long drawn
privatisation of Nitel/Mtel to a successful conclusion, and making sure
that the remaining assets were not balkanized and then adding thousands
of jobs to an economy in dire straits.
Chika Akwaja is a business analyst. The opinions expressed in this article are solely those of the author.
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