Backers of $2.5 billion Nigeria Nitel bid get "cold feet"

By Nick Tattersall

LAGOS (BestGrowthStock) – A Nigerian firm in a $2.5 billion bid for former state telecoms monopoly Nitel said on Thursday some of its backers had “cold feet” and asked for an extension to a payment deadline, again throwing the sale into doubt.

GiCell, the Nigerian firm involved in the preferred bid for Nitel, said it had requested a 30-day extension to a deadline for a 30 percent bid security, a $750 million payment due at the close of business on Thursday.

“Since the bid was won on February 16, it has taken government almost eight months to give final approval. Over this period our financial partners have developed cold feet and we need to reassure them of their investment security,” GiCell Managing Director Usman Gumi told Reuters.

Officials from Nigeria’s privatisation agency, the Bureau of Public Enterprises (BPE), which is handling the Nitel sale, could not immediately be reached to comment on whether the extension would be granted.

Nigeria is one of the world’s fastest-growing telecoms markets but the government has been trying for years to sell Nitel, struggling mainly because of the shambolic state of the company’s fixed-line infrastructure and huge debt.

President Goodluck Jonathan last month approved the $2.5 billion bid for Nitel by the New Generation consortium, which includes GiCell, Dubai’s Minerva and has China’s second-biggest carrier, China Unicom (0762.HK: ), as a technical partner.

Approval was conditional on payment of a 30 percent security within 10 days of a letter of notification from the BPE.

FINANCING DOUBTS

Questions have been raised over financing of the bid, which some analysts say values Nitel at more than five times its worth.

President Jonathan set up a panel in March, led by the attorney general, to investigate the top two bidders. The privatisation agency said last month the committee had found the planned transaction complied with due process.

“We are talking to several other financial groups to meet the deadline … we are confident that with this group of investors we’ll meet the 30 banking days requested,” Gumi said.

He said potential investors included West Africa’s Bank for Investment and Development (EBID) and a U.S.-based company called the Intercontinental Development Group.

Nigeria invited expressions of interest more than a year ago for a minimum 75 percent stake in the Nitel conglomerate or a stake in one or several of its components, including mobile arm MTEL, the South Atlantic Terminal underwater cable (SAT-3) and its domestic fixed-line network.

It first tried to sell Nitel in 2001 but preferred bidders failed to pay the $1.3 billion price tag by the deadline.

Local conglomerate Transcorp (TRANSCO.LG: ) later bought a majority stake but the government took back control last year.

Nitel’s fixed lines have fallen to fewer than 100,000 from five times that number in 2001 and subscribers to its MTEL mobile unit have dropped to a few thousand from over 1 million.

Omen International, a consortium registered in the British Virgin Islands, is the reserve bidder with a $956 million offer.

(Editing by Tume Ahemba and David Hulmes)

Backers of $2.5 billion Nigeria Nitel bid get "cold feet"