Nigeria has approved a $2.5 billion offer for its main fixed-line telecoms group Nitel, it has been announced.
However the government is insisting that the winning consortium come up with a $750 million down-payment to secure the sale.
The consortium will have 10 days to pay 30 per cent of its offer—or $750 million—from the date it receives an official demand for payment. It will then have 50 days to pay the balance.
The winning bid caused some controversy when it valued a 75 per cent stake in Nitel at five times the $500 million that industry experts were expecting to be Nitel’s maximum valuation.
However some analysts have said that a higher valuation could be justified if the sale includes rights of way to lay cables and build infrastructure across Nigeria.
The New Generation consortium includes China's second-biggest carrier China Unicom, Dubai company Minerva and local firm GiCell.
Nigeria is one of the world's fastest growing telecoms markets; but the government has been struggling to sell Nitel for years, largely because of the company's poor fixed line infrastructure and high levels of debt.
Part of Nitel’s debt includes salaries owed to its staff.
Today’s approval follows many previous failed attempts to sell Nitel—in 2001, preferred bidders for the telecoms group failed to pay the $1.3 billion purchase price by the deadline. Local conglomerate Transcorp later bought a majority stake but the government took back control last year.
Nitel's fixed lines now number fewer than 100,000—five times less than in 2001. Meanwhile, subscribers to its MTEL mobile unit have dropped to several thousand from over one million.
In acquiring Nitel, the consortium would also gain the South Atlantic Terminal underwater cable (SAT-3).
