FG CANCELS NITEL/MTEL SALE
The Federal Government has cancelled the privatization exercise for NITEL/MTEL following the inability of the reserve bidder, Omen International Consortium to revalidate its bid bond of $105 million, at the deadline of June 10, 2011. It would be recalled that the privatization of the telecoms utility began in 2009.
As a result of this development, the Bureau is exploring various options to consummate the sale of the telecommunications company. The BPE said it considers it apt to clarify various media reports attributed to its Director General, Ms. Bolanle Onagoruwa, regarding the various options being considered in addressing the NITEL challenge. The Director General was emphatic in saying that while several options, which included amongst others, liquidation and negotiated sale, were under consideration, the Federal Government had not yet taken a decision as to which of the options to pursue.?
It would be recalled that following the failure of the preferred bidder, New Generation Consortium, to pay 30 per cent security bid of its $2.5 billion bid offer, the reserve bidder, Omen, was thereafter called upon to revalidate its bid bond.?The deadline granted to the reserve bidder, Omen International Consortium, to revalidate its bid bond was Friday, June 10, 2011. In spite of a grace period granted till close of business on Wednesday, June 15, 2011, payment was not received. Thus, the transaction was therefore closed.
The BPE had written to the Omen Consortium in March asking if it would be interested in revalidating its original February 2010 offer of $959 million after the preferred bidder missed several payment deadlines. The agency said in April Omen had two weeks to respond but Onagoruwa said it had subsequently written a letter to promising to pay the bid security.
The government has been trying to sell Nitel for almost a decade, struggling mainly because of the sorry state of its fixed-line infrastructure and high levels of debt.Its fixed lines have fallen to fewer than 100,000 from five times that number in 2001 and subscribers to its MTEL mobile unit have dropped to a few thousands from over 1 million.
At the financial bid opening held by BPE on February 16, 2010, First Generation Consortium had emerged the preferred bidder with an offer of $2.5bn while Omen International Consortium emerged the reserved bidder with an offer of $956million.
However, BPE had recently terminated the bid of First Generation Consortium following the inability of the company to meet the revised deadline for the payment of 30 per cent of its $2.5bn offer. The privatisation agency also invited Omen to revalidate its interest in acquiring majority stake in the telecommunications company. The revalidation of interest was intended to enable the Federal Government to invite Omen to enter into negotiation with the consortium. Omen also failed to seal the deal.