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Nigeria: Nitel privatization has not been a success Print E-mail
Tuesday, 12 February 2008

Nigeria's 2006 privatisation of Nitel has failed to turn around the operator and the government wants a new investor to take control.

The government sold 51% of Nitel to Nigerian firm Transcorp for US$ 500 million, but Transcorp has been unable to raise enough money to overcome Nitel's problems.

"Incessant changes and disagreements between board members and top management in Transcorp are a major factor leading to instability in strategy and programme implementation," said a document stating the government's position.

The government still holds 49% of Nitel. The government now wants Transcorp to sell 27% of Nitel to a new investor, which would then purchase a further 24% from the government to take control.

Transcorp was set up with the support of then President Olusegun Obasanjo by a group of his business allies. During the final months of Obasanjo's tenure, Transcorp purchased a number of state assets, including a Hilton hotel in Abuja and a stake in an oil refinery.

Since the end of Obasanjo’s term in May 2007, Transcorp has struggled. In August, investors bought only 36% of the company’s IPO, which had been intended to raise money to repay what Transcorp borrowed to buy Nitel. The new government also took back the oil refinery, saying the privatisation had been improperly conducted.

Source: Reuters - WDR/Intelecon Regulatory News.