BPE considers five firms for NITEL liquidation

Bureau of Public Enterprises (BPE) has commenced the guided liquidation of NITEL and its mobile arm, Mtel, as it has started the evaluation of expression of interests (EOIs) from five prospective liquidators for the exercise.

 Guided liquidation was adopted because the liabilities of the national telecom carrier far outweigh the value of its assets. Under the option, creditors may not get the total value of NITEL’s indebtedness as the assets are to be negotiated with the buyers. The total proceed will then be shared by the creditors.

The workers of the moribund entities, who have now instituted a fresh legal action over unpaid arrears among others, had criticised this option, saying “it lacks transparency.” They specifically argued that some assets like the exchanges might be auctioned off at give-away prices.

The Bureau on February 20, closed request for EOIs for advisers, for which five responded. The assessment of the EOIs is ongoing.

Thereafter, request for proposals (RFPs) will be sent to those that meet the requirements of the privatisation agency. The RFP that emerges at the final selection will be appointed as the transaction adviser for the exercise.

A presidency official said a consortium comprising of experts from different sectors – legal, real estates, telecommunications – will be appointed because of the diverse assets of NITEL, saying “the bureau is still vetting the EOIs submitted, and the transaction adviser, when appointed will draw up the timetable for the exercise.”

Buyers of the assets are obligated to use it for telecom purposes, he explained further, noting “whoever buys whatever during the exercise must run it as a telecom concerns, as they will be made to sign agreement on this. Buyers of the assets, especially the core assets cannot buy it and change its use. They are only allowed to change the name.”

This exercise is coming a year after the National Council on Privatisation (NCP) approved guided liquidation for the sale of the entity, owing to its huge liabilities.

Previous attempts to privatise it had failed before Transcorp bought it in 2006. BPE reversed the sale in 2009, due to alleged inability of Transcorp to follow the Sales Share Purchase Agreement (SSPA) guiding the sale. Another attempt to sell the national carrier to First Generation Consortium and subsequently Omen International in 2010 failed, due to their inability to raise the bid offer.

BusinessDay learnt that all liquidators that have unresolved disputes with BPE would be excluded from the process for the appointment of a liquidator for the NITEL/Mtel transaction.

Industry watchers are however concerned that the guided liquidation exercise of the national carrier may take long to happen due to alleged interests of some government officials.

“Privatisation transactions have changed from what it used to be. The evaluation and the selection of liquidator may take about two months to end, unlike before that could be done in lesser period,” said another presidency official that does not want to be named.

“The whole exercise may not even be concluded this year,” he said

NITEL core assets were unbundled into four components in 2009 for ease of sale. They are the Sat-3, the digital lines, Mtel and the CDMA.

However, there are concerns over the value of the non-core assets that have since been eroded, especially with the controversial sale of Necom Building, which houses the Sat-3 on Marina in Lagos, and the NITEL headquarters at Garki in Abuja.

Interestingly, NITEL facilities, which have been in comatose for over six years, generated N101.38 billion last year. This however paled into insignificance against its huge liabilities, which BPE puts at N354 billion.

The liabilities are another area of disagreement between the privatisation agency and the workers who argued that the amount was overstated.

IIliyasu-Sa’ab, a former managing director of NITEL after the exit of Transcorp, put the total debt profile at N182 billion out of which NITEL owed N79 billion and Mtel owed N103 billion.

Mtel, the mobile arm, as of 2006 had 1.4 million-subscriber capacity and national geographic spread of 11.57 percent, as well as 566 base transceiver stations.

Culled from: BusinessDay

One Response to BPE considers five firms for NITEL liquidation

  1. Mr Aham says:

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