Nigeria to privatise Nitel for $2.5 billion

Nigeria to privatise Nitel for $2.5 billion

Nigeria’s fixed-line incumbent Nitel will be sold to New Generation Telecom for approximately $2.5 billion following government approval of a tender offer.

The consortium, made up of China Unicom, Dubai’s Minerva group and Nigeria’s Gicell Wireless, originally made the bid in February but the transaction was suspended after the country’s president ordered a review on the involvement of China Unicom in the consortium. The government is requesting an initial payment of $750 million, and the remaining $1.75 billion is to be paid within 60 days.

“The impact of this deal on the Nigerian market will largely depend on the new owner’s dedication and commitment,” said Badii Kechiche, senior analyst at Pyramid Research. “Minerva’s Middle Eastern equity backing and Chinese operational support could help it develop a determined and well-financed competitor in the Nigerian market. However, the group will require extensive and long-term investment to gain market share in the mobile side due to poor fixed-line networks in the country.”

Despite a recent round of international tenders, the government has tried to privatise Nitel in the past. The proposed sale of Nitel to Transnational Corporation (Transcorp) foundered after Transcorp failed to make promised investments and comply with sale conditions.

Kechiche added: “The new contender will also find it hard to cash in on Nitel’s existing fixed infrastructure. The introduction of multiple submarine cable alternatives to SAT-3 and the increasingly expanding backhaul capacity that mobile operators are building up provide reliable alternatives to the incumbent’s once monopolistic backhaul infrastructure."

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