MTN, Globacom in bidding for Nigeria's Nitel - TechCentral

MTN, Globacom in bidding for Nigeria’s Nitel

Lagos, Nigeria's largest city

Lagos, Nigeria's largest city

MTN Nigeria and Nigerian second network operator Globacom are among six bidders shortlisted for Nigeria’s stricken incumbent operator, Nitel.

State-owned Nitel has proved a headache for the Nigerian government as it has tried in vain for several years to find a suitable partner to restore the company to profitability.

The companies bidding for all or part of Nitel are MTN, Globacom, Brymedia, the AF21/Spectrum Consortium, Omen International and New Generation Telecommunications.

Nitel has struggled to compete against the mobile operators. Fixed-line substitution and competition from companies such as MTN, Zain and Globacom have drawn customers away.

The latest bidding round is the third attempt by Nigeria’s government to find a strategic partner for Nitel. The first attempt failed to get off the ground; the second resulted in local company Transcorp taking control of the operator.

But under Transcorp’s control Nitel continued to deteriorate. In 2009 the government took back Transcorp’s stake, saying the company had failed to adhere to the terms of the sale.

This time around, the Nigerian Bureau of Public Enterprises has invited bids for either 75% of Nitel or for stakes in one or some of its subsidiaries, including mobile arm M-Tel and its international gateway business.

Any company purchasing either the fixed or mobile parts of the company will be faced with an uphill battle recapitalising the company and dealing with a workforce that will not well to restructuring that will result in heavy job losses.

Recently, Nitel’s international gateway to the Sat-3 undersea cable has provided most of its revenues. It’s the assets Nitel’s suitors are most likely to want.

There are, however, two additional submarine cable systems due to reach Nigeria soon. The Glo-1 and Main One submarine cables are due to come online later this year and will compete directly with Sat-3.  — Ben Kelly, TechCentral

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