Nigerian carrier Nitel is to be managed by a Dutch consultancy firm.
The controversial manager contract will allow Pentascope International to run Nigerian Telecommunications Limited (Nitel) for a three-year period. The deal is crucial to a planned flotation of 20% to 25% of Nitel shares on the Nigerian Stock Exchange, and Pentascope hopes to fully privatize the company within three years.
Pentascope emerged as the preferred bidder for the manager contract, ahead of an Indian consortium, TCIL-BNSL, and US-based Africa Access/Lucent Technologies.
During the signing ceremony, hundreds of angry staff stormed the Nicon Hilton Hotel Abuja in protest. Workers and union officials remain highly critical of the deal. One of their main objections concerns the links that Pentascope has to Investors International London Limited, which last year won the bid to take over 51% of the government’s equity, but which failed to meet the payment deadline.
Pentascope will earn a contract fee of $45 million for the three-year deal if it meets revenue and earning projections in its business plan. It refused to say how much money a sale of 25% of the company’s shares could bring the Nigerian government, and also declined to reveal Nitel’s worth, saying it would take a few months to figure it out.
To achieve more reliability from its fixed-line network, the Nigerian government has specified that Pentascope is also expected to achieve a 95% call-completion rate, a maximum of 50 faults per 100 lines per annum, and the collection of at least 95% of Nitel’s revenue.
As part of the deal, Pentascope is expected to expand Nitel’s limited GSM network to one million subscribers from its 130,000 current subscriber base. It is also expected to add at least 600,000 fixed lines to the existing 800,000 lines in the next three years. However, according to observers, thousands of these lines are not working, and arbitrary line cuts and the interception of international communications by fraudsters, is commonplace. Significant investments could be required in order to improve the quality of the network.
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