TRANSCORP hands off NITEL in June
By Sonny Aragba-Akpore (Lagos), Emeka Anuforo and Nkechi Onyedika (Abuja)
TRANSNATIONAL Corporation (TRANSCORP) Plc has announced an exit time-table from the Nigerian Telecommunications Limited (NITEL), which it acquired in 2006.
From now till the June 2009 terminal date, TRANSCORP management yesterday announced a series of activities to make the phased withdrawal a reality.
These include the sale of its 51 per cent equity in NITEL and subsidiary, Mtel and the payment of debts owed some commercial banks by the corporation.
TRANSCORP chairman, Prof. Ndi Okereke-Onyiuke, announced the new arrangement in Abuja.
But the Federal Government yesterday said it evolved a more flexible timetable on the resale of NITEL.
Officials of the Presidency and the Bureau of Public Enterprises (BPE) told The Guardian yesterday that the core investor for the national carrier might be named before the June exit date of TRANSCORP.
TRANSCORP acquired 51 per cent equity on NITEL in November 2006 and since then, the fortunes of the company has nose-dived, such that its initial 500,000 functional lines have dropped to about 45,000.
Besides dilapidated exchanges across the country, NITEL's workforce has been reduced from 12,000 to below 2,000.
Also, unpaid salaries in the last 11 months has led to the shutting down of the company's cash-cow, the undersea cable link called SAT-3.
A debt overhang of $500m to a consortium of banks led by United Bank for Africa (UBA) remains unpaid, thus worsening the recovery of the one-time telecommunications giant.
Okereke-Onyiuke yesterday said TRANSCORP was willing to let go of NITEL in the next four months.
In a veiled admission that her company had failed to revive NITEL after three years in the saddle, Okereke-Onyiuke said: "Within 90-120 days, we will sell 51 per cent of the 51 per cent interest in NITEL. The funds from the sale will be utilised to pay off the debt on our balance sheet."
This position was countered by the BPE, which said the decision to sell 51 per cent was not that of TRANSCORP but the Federal Government, which is set to revive the dying national carrier.
The BPE source, who pleaded anonymity, said TRANSCORP "had failed woefully to meet its obligation to revive the company and to stem the sliding fortunes of NITEL/Mtel and government is left with one option - sell it to a new core investor."
The official said: "In 2006, TRANSCORP boasted it was getting €1 billion from a European investor, that failed and so it is difficult to believe that they (TRANSCORP) have any reasonable plan to resuscitate NITEL/Mtel."
Also a Presidency official confirmed that TRANSCORP had agreed to let go of its 51 per cent, "if the price is right and it looks good to do that now but I wonder if there is still anything left."
The source said: "The NITEL acquisition debt recovery seems to be the albatross in the operations of the group.
"So, to get this issue resolved, the group decided at an extraordinary general meeting in Abuja yesterday, to exit NITEL/MTEL by selling up to 51 per cent of the shares it owns in NITEL."
This came at a time investors have been expressing anger over the management's handling of their investments in TRANSCORP.
According to Ndi Okereke-Onyiuke, the company is on its way to getting this accomplished before the end of June.
She admitted that investors were not happy with their investments at TRANSCORP. Despite these challenges, she said that the company was still profitable and on track, without the NITEL debt.
Okereke-Onyiuke further said plans were underway to get rid of this debt within the next 120 days.
She noted that the potential of the strategic investment the core investors had made at NITEL/MTEL was politicised to the extent that it made the firms unmanageable.
Okereke-Onyiuke regretted that the focus on protecting and fighting for NITEL/MTEL had cost the investors dearly in other opportunities they could have exploited.
She said: "What we now have to focus on is simply executing the plans we have put in place. Once that is done, this company will have working capital, and will be largely debt-free and ready to fly very high."
She expressed anger that the "lines between the truth about the origin and operations of TRANSCORP have become blurred by the negative propaganda sponsored by individuals who do not want TRANSCORP to become the global conglomerate that we all believe it can become. But, my anger must be channelled and focused to drive the right results."
Okereke-Onyiuke, who is also the Director General of the Nigerian Stock Exchange (NSE), pointed out that in spite of the challenges, the company was still in possession of its assets and was poised to deliver on its Initial Public Offering (IPO) expectations.
On TRANSCORP's operations last year, she said: "In 2008, TRANSCORP reported operating profit of N541 million. However, finance charges related to the acquisition of NITEL were N16.6 billion resulting in a net loss of N16.1 billion, N16 billion worse than IPO expectations. This is primarily due to the lower than expected funds from the IPO, which prevented the pay-off of the NITEL acquisition loan.
"The debt on the balance sheet has resulted in the huge interest charges in 2008 which were not anticipated when the IPO and subsequent strategies were developed. The board and management plan to eliminate this debt, clean up the balance sheet and take the company to a very exciting future."
Meanwhile, Telecommunication operators gathered in Abuja yesterday to brainstorm on how to protect the industry from the current global financial meltdown. The forum organised by the Nigerian Communications Commission (NCC) was attended by telecom experts and economists.
Chairman, Senate Committee on Communications, Sylvester Anyianwu, said the Senate was in the process of amending the Telecommunication Act, to improve the quality of services provided by the operators.
He appealed to Nigerians to be patient with the operators, adding that competition would force down the prices of telecom services.
Executive Vice Chairman, NCC, Ernest Ndukwe, said the crisis had resulted in the failure and merger of major firms in Europe and the United States of America.
Admitting that Nigeria was feeling the effects of the crunch, Ndukwe stated that the global oil and gas sector had been severely hit.
He added: "As a result, the Federal Government revenue earnings have sharply declined as the oil and gas sector, as we all know, remains the largest revenue source for the nation. Decline in government revenue and tax receipts will no doubt result in ripple effect on various sectors of the economy."
Chief Executive Officer Zain Nigeria, Bayo Ligali, called for a two-year waiver on some regulatory fees to enable the operators grow the industry.
