FG, Senate head for showdown - Over revocation of sale of NITEL - As fear grips investors

From Taiwo Adisa Martin Ayankola, Bode Adewunmi and Seun Ayantokun - 18.02.2008

THE Senate appears to be heading for a showdown with the Federal Government over the decision of the government to revoke the sale of NITEL to Transnational Corporation (Transcorp).

The Chairman, Senate Committee on Privatisation, Senator Ayo Arise, has faulted the decision of the Federal Government to reverse the sale of the Nigerian Telecommunications (NITEL), declaring that the reversal did not conform with international norms and standards. He said that the Senate might review the privatisation law if it was discovered that there was a breach by the government in effecting the reversal of the sale of NITEL.

“I want to read the details and talk with the minister and see what are the justifications for this action at this time. If the rules were not followed, we (Senate) may have to look at the privatisation law and amend it,” he stated. According to him, “I have no doubt that with the reversal, the government may be compelled to pay back the money Transcorp paid to acquire NITEL, it doesn’t just happen,” he said.

The senator, who spoke on Sunday in the wake of the revocation of the sale of NITEL to Transnational Corporation (Transcorp), said that the government would have to come out with details of the instruments it relied upon to effect the reversal. The Chairman, Senate Committee on Communications, Senator Sylvester Anyanwu, also said on Sunday that his committee would meet in Abuja today to review the revocation of the sale of NITEL, noting that the decision was questionable because the government had not put in a kobo to justify its 49 per cent equity in the company.

“I am being told that the Federal Government has not put in one dime into the operations of NITEL to justify its 49 per cent equity in the company. I am going to talk with the minister, the NCC and other stakeholders,” he stated. Senator Arise said that he was surprised that the government chose this time to announce the revocation despite the agreement it entered into about two months ago with the Transcorp and the Nigerian Communications Commission (NCC), which mandated Transcorp to turn around the fortunes of NITEL in six months.

“I would want to discuss with the minister and the NCC to give details of what has transpired in the last two months to warrant the revocation of the sale,” the senator said. “You can’t just take such decisions without following acceptable norms and standards worldwide. If you have 49 per cent stake in a company and another person has 51 per cent, you can’t just reverse the sale, how do you defend that?,” the senator further said. He said that his committee had studied the situation of NITEL and discovered that the company was down and nearly out, but that in an era of due process, the laid down procedure which was the practice worldwide, should be followed.

According to him, government might not be the best suited agency to turn around a company. He said that the government could have taken back NITEL from Transcorp by buying it back at the market price instead of reversing the sale, which he said could send wrong signals to investors. Meanwhile, Transcorp has said it might seek legal redress on the issue. “ It is pleasing to note that the present Federal Government prides itself significantly on upholding due process and the rule of law, both of which Transcorp Plc also intends to follow in this instance,” a statement signed by the Vice-President, Communications, of the company, Mr. Adedayo Ojo, said.

The company said it had received a letter signed by the Minister of Information and Communications, Mr. John Odey, stating that the sale had been reversed. The statement said “Ironically, the purported reversal comes at a very crucial period in the actualisation of Transcorp’s efforts at revitalising both organisations. Among other initiatives, Transcorp had, indeed, identified and reached final stages in negotiations with potential technical partners.

“In the meantime, we crave for the patience and understanding of our shareholders, financial and technical partners as we go through this rather stormy period of our corporate existence. We assure you that we are doing everything within our power to protect your investment.” In a related development, fear is already griping investors in Transcorp following the Federal Government’s cancellation of the sale of NITEL. It would be recalled that Transcorp took up the ownership of NITEL in 2006 after a successful bid to acquire 75 per cent stake in it but it failed to pay up and later settled for about 51 per cent. Transcorp’s management failure to give NITEL the expected lift negatively impacted on the price of Transcorp’s stock in the capital market, making it tumble from N7.50 to less than N3.00.

Nigerian Tribune gathered that the cancellation is shattered hope of a better day as concerned investors do not know the next step the government is going to take in respect of the telecom company that has been going through unprecedented decline. However, some stakeholders in the telecom industry who spoke to Nigerian Tribune have been hailing the decision of the Federal Government. Mr. Gbenga Adebayo, President, Association of Licensed Telecommunications Operators of Nigeria (ALTON), described the decision of the Federal Government as a welcome development if the government puts things right to save it now.

A former high ranking executive of NITEL, Mr Tayo Ekundayo, also praised the government for taking the decision, but described it as a belated step, saying “the truth of the matter is that the step should have been taken before now because the situation of NITEL has not been in the best interest of Nigerians.”