Monday, 9 November 2009

NITEL: Creating A Level Playing Field

The Bureau of Public Enterprises, BPE, bars existing licensed GSM operators from bidding for the mobile arm of the Nigeria Telecommunications, NITEL, as the sale reaches the last stage

The Bureau of Public Enterprises, BPE, is making another move to privatise the Nigeria Telecommunications Plc, NITEL. This second attempt is coming less than one year after the botched effort to sell the telecommunications company to Transnational Corporation, TRANSCORP.
Already, many companies in the telecommunications business have indicated interest to buy NITEL. Industry watchers have expressed worry over the inability of BPE to effect the privatisation since 2006.
The companies that have indicated interest to buy NITEL include Etisalat Nigeria, EMTS, FineTex Consortium, MTNL Ltd, Globacom Ltd and Glob COM Ltd. Others are Anas Network Services Ltd, Telefonica Consortium, Metro Limited, Galaxy Backbone Plc and Cocnau Ltd.
Given the difficulties that have been encountered in trying to privatise NITEL, the Nigerian Communications Commission, NCC, proposed that NITEL be unbundled into units in order to be sold separately so that any bidder could buy any combination of units.
Notwithstanding the NCC's position, the BPE told Newsworld that existing GSM operators would be barred from buying the mobile arm of NITEL if NITEL is sold by a single unbundled unit because they are presently holding GSM licenses.
According to Dr Christopher Anyanwu who is BPE's director-general, “the present GSM license holders – MTN, Glo, Zain and Etisalat, are disqualified from buying the mobile arm of NITEL (M-Tel) if M-Tel is sold as a single unbundled unit given that they are presently holders of GSM licenses.”
Agreeing with BPE's position, NCC said that the purchase of M-Tel by any of the present GSM holders would present competition challenges and would be in conflict with regulator's guidelines and licensing conditions.
Glo holds the Second National Operator, SNO license which is why NCC has ruled it out of purchasing a bundled NITEL so as not to make it have two national operator licenses which would not be good for competition, giving them an undue advantage over other operators in the country.
While agreeing that it would be right for any of the local operating firms to buy NITEL without M-Tel and SAT-3, the NCC added that a reserved price tag should be placed on each unbundled unit of NITEL in proportion to its potential market value and asset base.
The Executive Vice Chairman of NCC, Chief Earnest Ndukwe said that NITEL's assets consist of digital mobile license, fixed wireless, land line and long distance operator licenses, international cable landing right license and value added licenses.
To get maximum use of the unbundling bid, it is believed that NITEL can be unbundled into digital mobile license and infrastructure gateway and SAT-3 submarine cable access. Other components include fixed network, CDMA fixed wireless, digital switches, external line plants cable network and metropolitan fibre cable networks.
Chief Ndukwe is of the opinion that CDMA fixed wireless network could be upgraded to a CDMA mobile network if the buyer obtains a universal access (internet service provider, prepaid card, coin box, internet exchange point, etc.).
Chief Ndukwe further said that unbundling NITEL would help BPE to overcome some of the regulatory barriers since “each buyer will likely pay a higher price for the component it values most important for its strategic plan. It will thereby enable government to make more money from the entire privatisation process.”
According to Ndukwe, unbundling would enable the small and medium size operators to participate in the process, thereby increasing the number of players and creating more chances of getting buyers for each component.
“The more the number of participants, the more the competition for the purchase of the items,” he noted.
The NCC boss said that 090 analogue equipment was obsolete and may not have much market value because “telecommunication is a fast changing industry, hence equipment and systems have tendency to become obsolete very quickly.”
One analyst who is not impressed with the expressions so far is Barrister Ndioye Uteh who said the unbundling of NITEL might present a more complicated challenge because selling NITEL in units might not be appealing to prospective investors.

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