Transnational Corporation of Nigeria (TRANSCORP) 30-month unimpressive management of Nigerian Telecommunications Plc (NITEL) came to an end yesterday with the Federal Government cancelling the sale of the once state-owned telecommunications giant to the core investor.
The National Council on Privatisation (NCP), which announced government's action yesterday in Abuja, said TRANSCORP had left NITEL in a mess.
The council, which said it was clear that TRANSCORP lacks the resource and technical competence to run the enterprise, explained that a technical board would be raised to manage NITEL until a new investor was selected for the firm.
At a press conference in Abuja yesterday, NCP member and Director-General of the Bureau of Public Enterprises (BPE), Dr. Christopher Anyanwu, said the NCP's decision was informed by the fact that TRANSCORP had breached the condition precedent on which the investment deal in NITEL/M-Tel was consummated, the implication being that TRANSCORP had walked away from the deal on its own.
Anyanwu said: "The NCP is of the opinion that TRANSCORP has opted out of the NITEL/M-Tel because it has failed to meet the condition precedent. The sale is hereby withdrawn. It is void because it never existed in the first place due to their failure to keep with the terms of the transaction agreement.
"TRANSCORP is aware of this fact and they have already given us the power of attorney (waves the paper) for their equity in the investment.
"Accordingly, the Federal Government has stopped the further sale of all assets of the two companies, whether core or non-core. In the same vein, all sold assets are to be reviewed and any found to have been arbitrarily and unjustifiably sold are to be recovered.
"Consequent upon this decision, a technical board is to be inaugurated today (yesterday) to take over the management of the two companies till September this year when its re-privatisation to a more competent and serious core investor is hoped to be completed," Anyanwu added.
He hinted that the government was desirous of having the two companies and other privatised non-performing enterprises back on stream and would not leave any stone unturned in this direction.
The BPE boss said in view of the fact that TRANSCORP might have sourced their investment funds from banks and other entities, government may open up discussions with the affected institutions to assist them claim their investments.
At exactly 1.10 p.m. on November 14, 2006, the baton of ownership for NITEL and its subsidiary, the M-Tel, changed hands from the government to TRANSCORP.
Before yesterday's action, TRANSCORP had left NITEL with a debt overhang of $500 million owed a consortium of banks.
By a Shares Sales and Purchase Agreement (SSPA) signed between the Bureau of Public Enterprises (BPE) and TRANSCORP on November 14, 2006, 51 per cent equity of NITEL was transferred to TRANSCORP while the government retained 49 per cent.
Under the Post-Acquisition Plan (PAP), TRANSCORP agreed to inject a minimum of N8 billion new funds into NITEL to prepare it for competition within 30 days and 100 days after the take-over. The PAP was to start the transition of NITEL and its mobile subsidiary, M-Tel, to a profitable and strategic telecommunications operator.
But 30 months after, NITEL's fortunes have nose-dived with its workforce reduced from 13,000 at take-over to less than 1,000 and telephone exchanges and other immovable assets such as switches in comatose.
NCP under the chairmanship of Vice President Goodluck Jonathan approved the constitution of a technical board to manage the affairs of NITEL/M-Tel until a new core investor emerges.
Minister of State for Information and Communications, Alhaji Ikra Bilbis, who read the resolution of the NCP meeting, said the revocation was arrived at after discussing "the outstanding issues in TRANSCORP's management of NITEL/M-Tel and other issues contained in the Shares Sales Purchase Agreement (SSPA)."
According to him, the decision was based on "serious breaches of the terms and conditions of the SSPA, particularly:
- exiting of British Telecommunications (BT) as the technical operator, which is condition precedent in the SSPA;
- failure of TRANSCORP to inject N8.9 billion cash into NITEL within 100 days of its take-over to address the immediate liquidity problem facing NITEL;
- failure to pay interconnectivity debt totalling about N17 billion;
- inability to pay workers' salaries in the past 11 months; and
- failure of TRANSCORP to maintain NITEL/M-Tel as a going concern, resulting in complete loss of market share from 15 per cent to 0.03 per cent.
Bilbis said it is clear that "TRANSCORP has vitiated and voided the contract in its entirety."
Former Communications Minister of State, Alhaji Ibrahim Dasuki Nakande, had in a working paper he sent to President Yar'Adua on January 22, 2008, recommended that since TRANSCORP had failed to irrevocably revive NITEL/M-Tel, the government should source for another core investor with the financial muscle and expertise to revive the national asset.
Nakande's letter was sequel to a resolution of a meeting of NITEL's shareholders on December 17, 2007.
One of its recommendations was share dilution by government and TRANSCORP as part of the bailout options besides scouting for a competent core investor in the long-run.
He also recommended a technical board to oversee the affairs of the company pending the selection of a core investor.
Nakande asked the government to recover assets sold by TRANSCORP, and a review of transactions of all non-performing privatised enterprises.
Then Director-General of BPE, Mrs. Irene Chigbue, handed over NITEL title deeds and other corporate insignias to the chairman of TRANSCORP, Prof. Ndidi Okereke-Onyuike, at a ceremony held at the NITEL corporate headquarters in Abuja, signifying the transfer of ownership.
Chigbue then said: "We are happy to see the conclusion of a long and difficult process which rates as one of the best on record for Nigeria and its people based on the objectives attained, beginning with the proceeds which is one of the biggest privatisation transactions in Africa and the second biggest telecommunications transaction in Nigeria after the Celtel/V- Mobile deal."
TRANSCORP, which was the lone bidder in the last ditch effort to sell the NITEL on July 3, 2006 offered a bid price of $750 million for 75 per cent equity.