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Tuesday, 19 February, 2002, 20:03 GMT
Nigeria considers floating Nitel
Phone box in Nigeria
Nigeria has only four phone lines per 1000 people
Nigeria's state-run telecoms monopoly will probably be floated on the stock market if the consortium bidding for a majority stake fails to pay up in time.

Last week, potential buyers Investors International Limited (IIL) missed the payment deadline which the Bureau of Public Enterprises (BPE) then extended by six weeks because there was no reserve bidder.


In the absence of a reserve bidder, we are left with the option of aborting the process and starting all over, which will cost the country $5m in investment banking fees and another 3 months in delays, or going ahead with the option we have on the table

Nasir Ahmed el Rifai
BPE

"It's likely to go the route of floating Nitel on the stock exchange and getting a reputable management company to sign a three year management contract to look after Nitel and remove Nitel from government control totally," the head of the BPE, Nasir Ahmed el Rifai told the BBC's World Business Report.

BPE said IIL would forfeit its deposit of just over $130m, if it failed to pay the full $1.31bn by the new deadline of 27 March.

NITEL, notorious for inefficiency and corruption, has installed only four phones per 1,000 people in Africa's most populous country.

Claims 'not credible'

IIL, led by Portugal Telecom, paid an initial deposit in December to acquire a 51% stake in NITEL, but defaulted on the remainder, which was due 11 February.

"We don't consider any of the reasons credible," said Mr Rufai, dismissing IIL's justification for missing the deadline.

Nitel poster
Nitel promises the world
IIL claimed the second national carrier licence issued by Nigerian Communications Commission meant they had to compete for investors.

The company also said the assassination in December of Nigerian justice minister Bola Iga and an oil explosion in Lagos this month accentuated country risk, making it more difficult for them to raise money.

Pressing ahead

Mr Rufai said Nigeria is committed to completing the privatisation of Nitel and transferring it to private sector management.

"We have run out of options and we don't have a reserve bidder," Mr Rufai said.

"In the absence of a reserve bidder, we are left with the option of aborting the process and starting all over, which will cost the country $5m in investment banking fees and another 3 months in delays, or going ahead with the option we have on the table," he said.

A consortium led by Korea's Telnet had been lined up as a reserve bidder, offering $1.31bn for the NITEL stake, but later pulled out.

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Nasir Ahmed el Rifai, Bureau of Public Enterprises
"It's likely to go the route of floating Nitel."
See also:

12 Feb 02 | Business
Nigeria phone bill payment delay
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