Telecom NZ’s Nigerian bid on hold

Nigerian media is reporting that President Jonathan Goodluck has put the privatisation of Nitel on hold for a fifth time as he attempts to reform his cabinet.

As first reported locally by NBR, numerous contenders are bidding to buy the state-owned phone company, including the Brymedia consortium supported by Telecom NZ International (TNZI, is a fully owned Telecom subsidiary that comes under Matt Crockett, better known for his twin role as chief executive of Telecom Wholesale).

The Financial Times reported that Telecom NZ would not disclose if it had taken an equity stake in Brymedia, which is bidding $US551 million ($NZ783 million) and which has pledged to invest $US5 billion in Nitel if successful.

Pressed by NBR, Telecom disclosed it was making no investment in Brymedia or financially supporting its bid in any way.

Spokesman Ian Bonnar said Telecom was providing technical support for Brymedia, and had an agreement in place for TNZI to handle Nitel’s international calling business should the consortium’s bid be successful.

“Through this arrangement TNZI also offers its extensive expertise in cable assets - relocation, operation and maintenance - to Brymedia,” said Mr Bonnar.

High risk, big pay-off
Paul Budde Communications African analysts Peter Lange told NBR that Nitel had suffered from years of chronic mis-management and under-funding.

A lack of officially-provided formation, made it difficult to put a value on Nitel.

Nevertheless, there were still possibilities.

“Nigeria is the biggest market in Africa by population [around 155 million] and by subscribers. But mobile penetration has just passed the 50% mark, so the remaining growth potential in the voice market is becoming more and more limited,” Paul Budde Communications African analysts Peter Lange told NBR.

“There is, however, still huge potential in the broadband sector. Those companies that moved into the Nigerian market early, like Celtel (now Zain) and South Africa's MTN in 2001, have made huge amounts of money. Despite falling ARPUs, the leading operator still has an ebidta margin of almost 60%.”

Everybody wants in
If President Goodluck does reopen the privatisation process, the Telecom-supported Brymedia faces a lot of competition, with bids all over the map.

“Bidders in the current round have bid anything between $US95,000 (the average house price in a good area of the capital) and $US2.5 billion (yes, billion) for 75% of the company,” said Mr Lange.

The $US2.5 billion bid comes from New Generation Telecommunications, which has technical support from China Unicom, and funding from a little-known Dubai syndicate called Minerva.

A Dubai syndicate is also in the running.