allAfrica.com: Nigeria: Nitel - Another Look At the Real Issues (Page 1 of 2)

Recent stories on the pages of some Newspapers suggesting that Government and Transnational Corporation of Nigeria Plc (Transcorp) may have differed over NITEL Crisis has once again started to elicit reactions among critically-minded Nigerians who themselves are stakeholders in the TRANSCORP project of transforming and turning around for good, the fortunes of the nation's premier telecom gateway.

Although it is on record that both Transcorp and the Federal Government have agreed on the strategy for repositioning NITEL- that is, to seek a new core investor- it is important to note that the contents of the news reports in some national dailies (not LEADERSHIP) may not have to be swallowed hook, line and sinker.

Analysts and observers are of the view that the issues canvassed by the Newspapers may have been blown out of proportion, fabricated and distorted making it pieces of write ups fit only for mere intellectual and academic discourse.

It could be true that Transcorp has had its own challenges regarding NITEL, but it will be uncharitable to ascribe the failures of the previous 30 years in NITEL, to Transcorp.

The challenges with NITEL have been mostly political in nature, not technical or financial. To transform a 30-year legacy, there is need to review the issues, develop a strategy, fund and aggressively implement. In this nexus, negative stories dubiously planted by adversaries who benefit from a dysfunctional and disorganised NITEL, will further damage the company and its ability to raise funds will become narrower.

Among others, some of the referenced news reports indicated that there were differences of opinion regarding what the real problems confronting NITEL are. While the differences exist, it is important to point out that as core investor, the responsibility of strategy development and implementation is contractually Transcorp's. As a public company with over 250,000 domestic and international shareholders, it has a fiduciary responsibility to protect the interest of it's shareholders. There is no doubt that there are dire legal consequences for all involved to ignore these fiduciary responsibilities for the sake of parochial interests. It is therefore of paramount importance to take another look at the scenario by taking a holistic look at it once again to set the records straight concerning issues of fact which, if not corrected, may assume credibility over time.

Some of the critical, albeit erroneous issues and insinuations making the rounds in the streets and the media include the following:

• That Transcorp attempted to sell NITEL's SAT-3 to a private company

• That Transcorp has not invested in NITEL since take over in November 2006

• That some revenue have accrued to Transcorp from NITEL

The facts about Transcorp's Investment in NITEL

• Transcorp has invested about N5billion in NITEL/MTEL since November 2006 for operating expenses while developing a turn around plan

• Transcorp has not taken a kobo from NITEL till date

• There was no attempt whatsoever to sell SAT-3

• Transcorp was at the final stages of finalising a new technical agreement when the Government announced a reversal in February 2008

• Transcorp has finalised an interim revitalisation plan that will inject N18 billion into NITEL; the plan is awaiting approval from NITEL board in which the Federal Ministry of Information & Communications is represented and is the proper venue for debate.

The SAT-3 Issue

The South Atlantic Telecom version 3, otherwise known as SAT-3 is NITEL's international gateway. As part of Transcorp's post acquisition investigation, it was discovered that the SAT-3 sub optimal infrastructure was being inefficiently managed. SAT-3 is made up of 64 STM-1s out of which only 9 are distributable. The available STM-1s operate at about 30 per cent level in terms of potential revenue. To rectify this abnormal situation, NITEL, under the leadership of Transcorp entered into a vendor financed agreement with Dimension Data and CISCO Systems Inc, two reputable companies with world class versatility. The Dimension Data/CISCO contract did not involve any upfront cash commitment by either NITEL or Transcorp. What is more, NITEL was to earn revenue to cover operating cost during the 3-year duration of the contract. Although, NITEL signed the agreement more than 6 months ago, the Federal Ministry of Information & Communications wrote to instruct that the contract be stopped on the basis of petitions from unknown sources that there were allegations that SAT-3 had been concessioned to a private company. It is on record that Transcorp Management has met with officials of the Ministry of Information & Communications many times since then to prove that no such sale was ever contemplated, yet NITEL continues to be denied the revenue from this initiative. The allegation of purported sale is not likely to be true. It is malicious and fabricated to keep NITEL in a perpetual state of inefficiency. It is unarguably not true as well as no one has evidence or fact to contradict Transcorp's position, otherwise it should have been published by same.

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