Brymedia has launched a fresh drive to buy the Nigeria Telecommunications Limited (NITEL) in what may see the second reserve bidder in the botched 2010 sale a contender to watch under an ongoing phased liquidation of assets of the pioneer national operator.
The Bureau of Public Enterprises (BPE), the government privatization midwife, opted for a phased liquidation of NITEL after another unsuccessful privatisation programme in 2010 that would have resulted in divestment of 75 per cent stakes in the public-owned telecoms company to willing buyers.
New Generation Consortium, made up of China Unicom of Hong Kong, Minerva Group of Dubai and Nigeria’s GiCell Wireless Ltd emerged preferred bidder for NITEL and its mobile subsidiary, M-TEL with an offer of $2.5 billion; Omen International, emerged reserve bidder with $956,996,091 while Brymedia emerged second reserve with $550 million in the botched transaction.
Adrian Wood, CEO of Brymedia, the consortium that emerged second reserve bidder in the aborted privatisation of NITEL told Technology Times in an exclusive interview that its refreshed plan for NITEL is part of a two-pronged foray for dual stakes in the Nigerian telecoms sector.
Under its comeback bid, Brymedia has opened talks with the liquidation manager appointed by the BPE with eyes on key assets of NITEL to drive an ambition of transforming the moribund telecoms company into the wholesale broadband provider of broadband in the Nigerian market.
To complement the plan, Brymedia is joining the race for planned auction of a 2.3GHz frequency spectrum that will make the eventual winner the wholesale broadband service provider for the Nigerian telecoms market.
This followed the flag-off of the frequency auction by the Nigerian Communications Commission (NCC), the telecom umpire that has announced a of N3.6billion ($23m) reserve price for the auctions billed to be completed by March this year.
Wood told Technology Times that Brymedia is back in the race for the two niches telecoms market stakes because they both align with the consortium’s original plan and strategic plan to play in the wholesale market space that will transform NITEL into a “carrier’s carrier.”
Unlike the 2010 privatisation programme when bidders targeted 75 per cent stakes of NITEL being offered for sale at the time, Brymedia is refocusing its direction in the area of key assets of the pioneer national operator under the new liquidation plan, Wood tells Technology Times.
“In February 2010 we were the second reserve bidder and third highest bid and it is history that the first two dropped out and we were ready to proceed. We have our investors and international technical partners. For reasons that I guess surprised us, the BPE terminated the process”, Wood says.
According to him, “in August 2011, they (BPE) wrote us a letter inviting us for discussion, so we prepared a timetable but nothing happened and as you know in 2012 the government decided to devise the liquidation and they appointed a liquidator. We have been following the process. We have been patient. We never offered to buy the shares of NITEL. We have always wanted to buy the assets of NITEL.”
Wood outlines that to achieve its strategic drive to use NITEL to transform the broadband fortunes of Nigeria, the consortium eyes key assets of the moribund telecoms company
One of them is what he cites as NITEL’s “spectrum portfolio” that includes the frequency bands used to offer fixed, mobile, CDMA services as well as “quite some few microwave frequency.”
Another category is NITEL’s special infrastructure, which Wood reckons include about 554 GSM towers and some 251 transmission systems across the country, which though have non-functional electronics but can still be reactivated.
According to him, NITEL also has “technical properties with some form of switch or some forms of cable termination in every state and every major city in Nigeria and these are places where you put in fiber termination point and fiber access equipment.”
Add that to SAT-3, the first undersea cable landed in Nigeria which is part-owned by the Nigerian telecoms company alongside a consortium of African incumbent operators and equipment suppliers which Wood notes that tied with other assets reflects “what the value of NITEL is right now.”
Citing non-disclosure agreements with some of his technical partners and co-investors in the Brymedia consortium, he did not name the specific members of the team but hints that its new technical partner is a major operator from Asia.
Wood, who is the Founder and Director of Brymedia Group, believes that the broadband programme being championed by President Goodluck Jonathan, who has mapped out the Presidential Broadband Plan to deepen penetration of high speed Internet services in the country, will deliver on its promises.
Broadband is seen as next layer of growth in the Nigerian telecoms market which has witnessed over a decade of mobile telephony boom since the entry of GSM networks in August 2001, he says but reckons that GSM network operators may not deliver true broadband, if that vision is to be realised.
According to him, “the network operators have only 30 to 40 per cent of their base stations equipped with 3G. In my opinion in order to get much better Internet access and Internet speed, they should have 80 per cent of their base stations 3G-equipped. In Nigeria, Internet penetration is 20 per cent whereas mobile penetration is now 85 to 90 per cent. That’s a huge gap. So, even before considering 4G, more investments have to be done on 3G penetrations.”
Woods reckons that delivering broadband requires investments not being met by incumbent mobile networks.
Wood should know as he occupied a front row seat in the evolution of Nigeria’s mobile telephony boom as he was in 2001 appointed CEO of MTN Nigeria Communications Limited, the South African-owned operator which is the number one mobile phone company by subscriber numbers.
Under his watch, by MTN Nigeria’s third full fiscal year, the mobile phone company had revenues over $1.5 billion, net income of $509 mill and 47 per cent market share.
He recollects that in five years MTN Nigeria morphed into an $8 billion valuation business and continues to produce over 42 per cent of the entire South Africa’s MTN Group’s 21-country EBITDA, with 37 million Nigerian customers.
He is reassured that the mobile telephony success can be replicated with the planned investments into broadband when he cites that, “in the last three years, MTN Nigeria paid a dividend of $3.875b to its share holders. Airtel that started up as Econet has attracted investors three times and they all did well. Celtel did extremely well then Zain doubled their money in Africa and Nigeria was their standout trophy asset. Now we have seen Bharti-Airtel coming the third time.”
According to Wood, “local investors who are not in telecoms at the moment can draw comfort from the fact that the risk has been taken out of the Nigerian market. It has proven to be a deep market. I think we won’t have difficulty in attracting local investors.”
– Technology Times
