Complexity of Nigeria's NITEL Deal Causes Delay in Sale

­The deadline for bids for Nigerian telecoms incumbent, NITEL, has been pushed back from today to the end of October.

Onda Analytics believes the complexity of the opportunity, resulting from the difficult situation NITEL has found itself in, is to blame for this delay. NITEL's new owner will be almost starting from scratch against its competitors, with a negligible mobile market share and a carrier business suffering from underinvestment.

However, according to an Onda Analytics report on the sale, under good ownership, NITEL could claw back almost 15% of the Nigerian mobile market by 2015.

According to the report's lead author and Onda Analytics partner, Tom Harden, NITEL's recent history means this is the Nigerian government's last chance to get the sale right. "Previous privatisation attempts have ended unsuccessfully, with inadequate technical and financial muscle. With staff going unpaid and its subscriber base dwindling, the company is on its knees. Bringing in a major investor, with strong network re-engineering experience and a major international brand is the last realistic chance to save it".

Report co-author, Daniel Jones (partner), believes the delay is no bad thing. "The process has so far been pretty quick. A two month window from the initial expressions of interest always looked tight. The most important thing is for the Nigerian government to get it right this time, even if that means the process is more protracted than was originally envisaged".

Onda Analytics' report considers the cases of recent incumbent privatisations in Africa as examples for NITEL to follow. France Telecom bought a 51% stake in Telkom Kenya (now Orange Kenya) in December 2007, while Vodafone acquired a 70% stake in Ghana Telecom (now Vodafone Ghana) in July 2008. The investments have turned around the fortunes of both companies. With similar backing from a major investor, Onda Analytics forecasts NITEL to grow its mobile subscriber base from under 100 000 today, to over 18 million in 2015. This would be equivalent to a 14% market share of the fast-growing Nigerian market.

On the web: Onda Analytics

Posted to the site on 2nd October 2009