NITEL offered for $2.5b as questions remain over the buying company

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President  Goodluck Ebere Jonathan has approved  $2.5 billion sale for the struggling state-run telephone company.

There had been  lingering questions over the consortium that offered to buy the ailing national asset.

President Goodluck Jonathan’s approval still leaves a serious challenge for the New Generation Telecommunications Consortium. The group must provide a $750 million down payment within 10 days after the government notifies it of its winning bid for the failing Nigerian Telecommunications Ltd., known locally as Nitel.

That deadline puts immediate pressure on the consortium, which Nigerian federal officials say includes China’s Unicom Ltd., Dubai’s Minerva and local company GiCell. The Nigerian government said in a statement Tuesday that the consortium must pay the remaining $1.75 billion within 60 days after that.

Nitel, in principle, provides landline telephone service in Nigeria, Africa’s most populous nation with 150 million residents. However, the state company’s telephones now rarely work, pushing most consumers into the oil-rich nation’s rapidly expanding mobile phone market, where private companies hold the edge.

Nigeria has an estimated 1.3 million landline telephones, compared to 62.9 million mobile phones.

Privatizing Nitel could prove profitable, as the company does have lines strewn throughout Nigeria’s cities. However, the $2.5 billion bid by the consortium appears grossly overpriced compared to the next highest bid of about $956 million by Omen International.

Questions also remain about New Generation. State-owned Unicom, one of China’s three major phone carriers, said in February that it had expressed interest in a technical role in privatizing Nitel.

However, Unicom denied that it was part of the consortium biding for the carrier.

Attempts to privatize Nitel have failed in the past over questionable deals between the government and private investors.

The country may also privatize its state-run power company soon as indicated recently by the government.