No, No BPE, NITEL is worth more

[alhaji_aminu]

Salam

Bearing any last minute changes, and believe me OBJ's goons are bad at negotiating what is best for Nigeria, NITEL, yes that company we all love to hate for those wannan nambar da aka buga an tsayarda da ita na wucen gadi, will be sold to Orascom of Egypt for a stinking $256m. Yes 250 freaking million or about $100m more than what TAFA balogun stole from NIgeria.

I should make it clear though that I am totally FOR selling NITEL. I mean, at a time when MTN is making almost =N= 19B profit annually, what possible excuse does NITEL have for not doing better considering its existing infrastructure and other advantages?

I have seen the reaction of a cross section of NIgerians on the issue. Some seem to think that how can a company that was valued at over $1b dollars 2 years back be worth 1/4 of that today? Other are simply saying, how can NITEL (+ Mtel to boot) be sold for $256m when the cost of procuring a license for Metl was over $285m?

Both complaints do have merits but not the way people are peddling them.  
* The fact that IIL ltd offered $1.3b dollars is an expression of IIL's opinion of what NITEL was worth. Normal asset valuation method's- DCF, rel val, do not apply here as 1) NITEL is a distressed company and; 2) there really isn't a single company with which to compare NITEL to. In this kind of sitaution, the acquiring firm - Orascom and Newtel ( I heard Newtel is an SPV used by some high profile Nigerians formed to fleece us all) will have to use very subjective criteria to value the company hence the divergent figures. I still, however, think that the $256m was too small

* The fact, also, that NITEL has massive liabilities (almost $1b) complicates matters. The deal selling NItel doesn't say whether or not Orascom is agreeing to absorb the debt. If it does, then the price Orascom is paying is actually much higher than $256m since Orascom has to eventually settle those liabilities. Otherwise, we will be left with the AP/SADIQ kind of fiasco which doesn't augur well for our oft claimed 'transparen conduct' in selling off national assets.

What I find most sneeky about this deal is the fact that Orascom has substantial stake (bought very recently) in the parent of the newtel consortium.
Is it a coincidence that newtel declined to make a secondary offer after both companies colluded(??) to make puny bids at the opening?
Nigerians deserve an answer and damn fast too!

[mallamt]

alhaji_aminu
yeah very interesting.  Heard that Orascom in the initial bid some time ago actual offered about 280 million dollars for the GSM arm of NITEL only now within abot 24 months they are offering 250 million dollars for both fixed line and GSM, very strange.

What I do not really understand is why ws nitel wound up like nigeria airways and a new company formed in the same or similar manner with virgin nigeria?  Some of the wound up nitel assets could be taken into the new company as equity right?

[gogannaka]

Recently an american company invested about $400 mil in rosecom telecoms nigeria for the provision of ADSL, a south african company is goin to invest $200mil in intercellular nigeria ltd,A south african company invested $400mil in starcomms,Vmobile is investing $2bn in its 'project rose' campaign which involves setting up 2000 base stations in the country
Now we are selling the WHOLE of nitel(i.e including MTEL) at $256mil...the arithmetic doesn't add up.
To sell nitel at this price will be a great mistake that nigerians will live to regret.

[Dante]

Honestly, Its worth billions of $$$. This is the country's main Communication line they are talking of. Even Globacom is worth more than that.

[neozizo]

Very enlightening alhaji_aminu.
Well im not exactly a financial pundit but one thing i agree with is that BPE is at least trying to conduct the transaction openly and tranparently.

[gogannaka]

The Senate Committee on Communications yesterday called on the executive arm of the Federal Government to shun the $256.5 million bid offered for NITEL by Orascom, an Egyptian based telecommunication provider.
The Chairman, Senate Committee on Communications, Senator Baba Tella (PDP, Bauchi State), who spoke on behalf of his Committee at an interactive session with newsmen at the lobby of the National Assembly, said the nation should not throw away its vital assets under the guise of privatisation.
According to Tella, "if the President has cancelled the bid, I will support it and I will urge him to cancel the bidding if he has not done so.
"In our haste and in our desire to privatise and sale government assets in the name of making them efficient or something like that, we should not be throwing away our vital assets."
"I give you example whatever ORASCOM bided for the purchase of NITEL or MTEL falls short of even the amount of money the federal government paid for the GSM license of MTEL at about $285 million," Tella argued.
Continuing, he advanced that from the time Pentascope came in, every single kobo that was generated by NITEL and MTEL was reinvested back into the business and I assure you that NITEL and MTEL combined together raise somewhere between N300 and N900 billion per month.
"I am not sure but I will confirm and all this money has been invested back into the company's operations.
SAT 3 alone is capable of generating over N200 billion in a year if utilised completely, he added.
"I will support Mr. President in cancelling the bid of NITEL. We will present it to the Senate and have a Senate position immediately we resume. We will present it to the Senate and it will be discussed by the Senate and we will come out with a position.
But in the interim, our feeling is that the status quo should be maintained. Competent and capable management should be installed in NITEL because there are a lot of competent managers in this country."
"Even if it is going to be privatised, the modalities of that privatisation should be clearly worked out by government, maybe by way of IPO," Tella submitted.


culled from thisday newspaper.

[neozizo]

Trans-national Corporation Plc(leading two other partners, British Telecom (BT) and  Etelsa), has emerged final winners of the bid to acquire Federal Government?s 75 per cent equity in the ailing Nigeria Telecommu-nications Limited (NITEL) and its mobile subsidiary, Mtel for the sum of $750 million(about N90 billion).
According to the terms of the transaction, all liabilities and debts of the ailing national carrier will remain its responsibility with the exception of human resource related issues, such as pension liabilities and costs associated with downsizing, which the government will assume.

Of course controversial issues like Pentascope's management contract, argued to be designed to purposely devalue NITEL so it can be attractive to investors and Transcorp's ownership (Obj's N600 million worth of shares) and management(a star-studded list of BODs having Mrs Ndidi Okereke-Onyiuke (the director-general of the Nigerian Stock Exchange) as it chairman) cast a dark cloud of impriety over the deal.

Doesn't the fact that the president of the Federal Republic of Nigeria who is busy ?fighting corruption? is a major promoter and shareholder of this company have anything to do with the success of the deal?
Isn't there a conflict of interest for the DG of the NSE to be chairman of a publicly quoted company?

I don?t want to be a pessimist so I hope and pray the deal turns out to be of benefit to the future of NItel and Nigeria as a whole.

[neozizo]

http://www.dailytrust.com/news.htm
Transcorp is in the Headlines again.
I cant get what Okereke-Onyiuke is trying to say:
Obasanjo didn't buy Transcorp shares himself,he sent someone to buy them for him so the 200 million shares don't really belong to him... :?  :shock:  :?  :shock:  :?

[neozizo]

There is hope for Nigeria after all!!
The elite cant do what they like and get away with anymore.

I hope Okereke-Onyiuke & co get to pay for their failed transcorp debt by doing time.