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Monday, 19 November, 2001, 17:32 GMT
Nigeria set to complete telecom sale
The privatisation of Nigeria's state-owned telephone company, Nitel, is expected to be completed on Thursday.
Three groups of investors have been bidding for majority control, with the preferred consortium, Investors International London, bidding in a recent auction more than $1.3bn for a 51% stake.
The preferred consortium is headed by Chief Bode Akindele, a businessman of the Yoruba tribe, who has a variety of business interests from flour milling to shipping.
Chief Akindele told the BBC's World Business Report the consortium had drawn up a five-year development programme for Nitel with spending estimated at $2bn.
"In the proposed purchase agreement with the government the target is 1.4 million lines within the next five years," he said.
"But from our own programme we believe we can do much better and we are looking at something in excess of 2 million lines."
A huge amount of investment is required to tap the potential of the Nigerian market.
There is fewer than one telephone line for every 250 people and getting a line installed can be extremely difficult because of bureacracy and corruption.
Many Nigerians view Nitel as among the worst telephone companies in the world.
Despite this the director general of the organisation overseeing the sale says he is not surprised at how much the investors were willing to pay.
Nasir Ahmed el Rifai, director general of the Bureau of Public Enterprises, told the BBC's World Business Report that the company had many valuable assets.
"The GSM [mobile phone] licence was $25m, there is an analogue network with about 13,000 subscribers."
"There are also 700,000 lines which at minimum valuation are $1,000 per line so when you add that up... you can see clearly where the $1.3bn is coming from," he said.
Investors International London is to contract out management of Nitel to Portugal Telecom for five years.
Chief Akindele said the experience Portugal Telecom has operating in African markets, and the fact that the company was itself privatised only five or six years ago, made it an ideal candidate.
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