Transcorp to acquire Nigeria's state-owned carrier Nitel for $750M, with BT as a technical partner

July 4, 2006

4 Min Read

LAGOS, Nigeria -- Transnational Corporation of Nigeria Plc (Transcorp) and the Bureau of Public Enterprises (BPE) announced today an agreement for the acquisition of a majority stake in The Nigerian Telecommunication plc (NITEL) by Transcorp, an acquisition that will enable Transcorp transform NITEL into the leading telecom operator in Nigeria and Africa. The announcement signifies the completion of the privatization process for NITEL.

NITEL is the dominant fixed line operator in Nigeria, with approximately 77% of the market and operations in all 36 states of Nigeria. M-tel, its fully owned subsidiary, is the number four mobile telephony operator, with approximately 1 million subscribers as at the end of 2005. NITEL has the most extensive network in Nigeria with the ability to provide telecom services to its customers throughout the country. In addition, NITEL has shares in the following companies:

  • 7.33% share in the South Atlantic Telecommunication/ West African Submarine Cable Organisation (SAT3/WASC)

  • 6.91% share in Regional African Satellite Organisation (RASCOM)

  • 0.21% share in International Maritime Satellite Organisation (INMARSAT)

  • 0.60% share in International Telecommunication Satellite Organisation(INTELSAT) (Shares liquidated in 2005 as a result of Intelsat privatization) and

  • 0.07% shares in ICO Global Communications Ltd (I-CO).

Transcorp intends to wake NITEL from its deep slumber and turn the sleeping giant into a more effective and efficient provider in the wireless, broadband, video, voice and data markets.

BT as the Technical Partner

Transcorp has entered into a Memorandum of Understanding with BT to utilize their services in the management and operation of NITEL during the turnaround. Transcorp chose BT due to the fact that not only does BT have the experience of managing the type of telecom infrastructure that Transcorp envisages for NITEL, but BT has the unique experience of having, in 1984, undergone a successful privatization process similar to the NITEL privatization, in which BT was sold as an integrated company and has grown from strength to strength. Similar to the Transcorp’s aspirations for NITEL, BT has been transformed from the pre-privatization telecommunications company into a fully integrated IT company in the telecommunications sector. Prior to its privatization, BT was languishing, laden with a huge debt burden of more than £30 billion, and has now been fully transformed and growing. Transcorp believes that working with BT provides Transcorp the best opportunity for engineering the transformation of NITEL to regain its position as Africa’s flagship telecommunications provider. BT is playing a similar role (as a technical partner) for Saudi Lebanese Company, Oger Telecom, the winner of the recently concluded privatization of Turk Telekom by the Turkish Government.

Transcorp’s Approach to Managing NITEL

Transcorp’s approach to managing the NITEL business will involve intense investment in forging long-lasting relationships with customers to maximize their satisfaction with the services offered. Transcorp intends to achieve this with an unmatchable combination of high quality service, market driven products and services and efficient pricing. This new NITEL will truly be passionate about all of its customers, and, as a result, will embrace the new competition in the industry represented by the universal license regime.

Logical Next Step for Transcorp That Creates Substantial Value

"This acquisition is a logical next step for Transcorp in its vision of developing world class enterprises and infrastructure under strong Nigerian management and leadership,” said Transcorp Chairman, Dr. Ndi Okereke-Onyiuke. She stated that the development of the telecom industry is key to the future of the country and the economy. Dr. Okereke-Onyiuke noted that “the acquisition will create substantial value for customers of NITEL, stockholders of Transcorp, and all other stakeholders. It will benefit customers through new services and expanded service capabilities. She noted that Transcorp is confident that this is an acquisition that Transcorp can execute, as the Company has assembled a first class team to be led by a highly talented team of Nigerian professionals with experiences in the leading telecom companies around the world, to be supported by the skills and technical knowledge of BT engineers.”

The Chairman of Transcorp further stated that Transcorp will “pursue a simultaneous program of internal efficiency and aggressive rollout at NITEL.” She noted that Transcorp, with the team that it is assembling for the management of NITEL, is uniquely positioned to capture the benefits of a turnaround of NITEL whose assets have been historically under-managed and suffered from under-investment in its network and customer propositions. She also stated that the new NITEL will focus on providing great service, innovative and competitively priced products for consumers and businesses throughout Nigeria.Mrs Chigbue, the Director General of BPE remarked that “this is a great day for all NITEL stakeholders and a significant step for NITEL that will drive real choice for customers on a national basis.”

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