Mubadala, Alheri, Others May Acquire Mtel

2007-04-18 14:00:00 | Viewed 1999 times

The two newest entrants into the Nigerian telecommunications sector, Mubadala of the United Arab Emirates and Alheri Engineering Limited, have approached Trans National Corporation Plc (Transcorp) separately over the possibility of acquiring a stake in Mobile Telecommunications Limited (MTel), the mobile phone subsidiary wholly owned by NITEL.

Both firms will be joining a list of other firms, including one being fronted by the Lagos-based industrialist, Oba Otudeko, that have commenced exploratory talks with directors of Transcorp, for a stake in the mobile phone company.

Interest shown by the firms coincides with the decision by MTel Board of Directors to terminate the appointment of the Managing Director of MTel, John Weir, who had been seconded to Nigeria by British Telecom (BT) four months ago, under a technical services agreement with Transcorp.

Mubadala was last January, awarded a Universal Access Licence by the Nigerian Communications Commission (NCC), after it had paid $400 million among other licencing requirements stipulated by the Commission.

Alheri Engineering on the other hand, was one of four companies awarded a provisional 3G licence by NCC two weeks ago, after meeting the pre-qualification criteria and paying a non refundable deposit of $15 million, representing 10 per cent of the $150 million reserve fee for the licence.

Alheri is believed to be a subsidiary of the Dangote Group, fronted by businessman, Aliko Dangote.

while Mubadala is being fronted by another business mogul, Hakeem Belo-Osagie.

Mubadala and Alheri are said to be very keen on acquiring equity interest in Mtel, due to the fact that the company already has an existing mobile network which is on the verge of being upgraded to accommodate three million subscribers once Transcorp, which has controlling interest in the phone company concludes a vendor financing negotiations with Ericsson, among other equipment providers.

According to an industry source, it would be much faster for Mubadala and Alheri to roll out their networks if they had a stake in an existing network, rather than building greenfield networks that will take time to deploy."

But the interests shown by Mubadala, Alheri and Otudeko's firm may likely hit a brick wall, given the fact that NITEL is still partly owned by the Federal Government, which has a 49 per cent stake in NITEL and by extension, MTel.

Both NITEL and MTel currently have Federal Government representation on their boards made up of officials of the Bureau of Public Enterprises (BPE), Ministry of Information and Communications, and Ministry of Finance Incorporated (MOFI), who would all have to concur to a take over bid by an external company.

In addition, the Share Purchase Agreement entered into by BPE and Transcorp after the latter had successfully paid $500 million for 51 per cent of NITEL, imposes a five-year holding on the core investor, which bars it from transferring the shares to a third party for a duration of 60 months.

However, in the same Share Purchase Agreement, another clause without prejudice to the clause that stipulates the 60-month holding period also permits "the core investor to seek the consent of the BPE to transfer the shares held in NITEL and/or MTEL to a third party, and the consent shall not be unreasonably withheld."

Meanwhile, the Board of MTel in its meeting held on Thursday, March 22, 2007, resolved to terminate the appointment of John Weir, who had been seconded to Nigeria by BT, under a technical services agreement four months ago.

Wier was dismissed along with the Head of Human Resources in MTel, Mr Osodi and the General Manager in charge of Strategy and Corporate Planning, Mr Kayode Amodu.

Although it is unclear what led to their dismissal, but the Board has given BT four weeks within which it is expected to send a replacement for Weir. His replacement, THISDAY learnt, will be determined by the Board after BT must have submitted three CVs of qualified candidates who shall appear before the Board for screening.

Mtel secured a 2G GSM licence in 2001, along with MTN and Econet Nigeria Limited. But in comparison to other network providers, the company has performed woefully, having lost market share and most of its 1 million subscribers since the recommencement of the privatisation exercise to sell NITEL to a core investor in 2004.

Presently, the company is believed to have less than 200,000 subscribers on its network, most of whom are not active. MTel has also been bedeviled by inadequate transmission capacity and has unpaid interconnect fees estimated to be in the region of N16 billion.

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