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Guided liquidation: Nitel Creditors to Lose N400bn


News » Editorials
Nigeria

June,23,2014

As the June 30, 2014 deadline for bids for Nigerian Telecommunications (Nitel) assets  approaches there are indications that the moribund company’s creditors may lose N400 billion.

Nitel’s creditors are mostly suppliers and are owed up to N400 billion according to estimates. However, experts believe Nitel’s creditors would be unwise to expect any recoveries from the current “guided” liquidation.

The state appointed liquidator for Nitel, a Lagos-based accountancy firm, has stipulated that bidders must have five years’ industry experience and net assets of $200 million.

Before Nitel was placed under liquidation, there were several unsuccessful attempts to sell it as a going concern to Nigerian interests as well as businesses in the Netherlands, Portugal, China and Dubai. One consortium offered up to $2.5 billion in 2010 but failed to pay the deposit.

Nitel does have some subscribers although the numbers shown by the industry regulator, Nigerian Communication Commission (NCC), are curiously unchanged for the four successive end-quarters through to December 2013 - 58,750 in the fixed wireless segment and for its mobile arm M-Tel, 258,520 as against the 124.8 million subscribers in the GSM segment.

Meanwhile, analysts at FBN Capital believe the fixed/fixed wireless segment is under pressure in other frontier markets although not evidently on the scale of Nigeria.

“The Communications Commission of Kenya reported 206,000 subscribers in December 2013. This represented a 18 per cent year-on-year decline and the data appear credible (if only for the reason that the reporting produced a change in the number of subscribers).

“Traffic declined by 25 per cent y/y to 40.1 million minutes in Q4 2013. The fixed line is not redundant, and has a role in government departments, company offices, hotels and residential blocks. However, the proceeds of Nitel’s liquidation will be modest," they said. 

The analysts pointed out that the history of privatisation in Nigeria has been one of failure with a few exceptions such as some banks and cement companies.

The Director-General of the Bureau of Public Enterprises (BPE), Benjamin Dikki, recently  in Abuja disclosed that the federal government had over time invested N1.6 trillion in 600 public companies. The funding, he added, only created 500,000 jobs including 5,000 board members, and up to N2 trillion in pension liabilities for the FGN.

Dikki estimated that the companies run on subsides and grants which cost the federal government a whopping $3 billion equivalent annually. Additionally it pays about $6 billion annually in fuel subsides.

Article Credit: Thisdaylive

Updated 5 Years ago
 

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