TRANSCORP BIDDING FOR NITEL

C O N F I D E N T I A L LAGOS 000867 SIPDIS SIPDIS E.O. 12958: DECL: 06/19/2016 TAGS: ECPS ECON EINV EIND PGOV PREL NI SUBJECT: TRANSCORP BIDDING FOR NITEL Classified By: Consul General Brian L. Browne for reasons 1.4 (B/D) -------------- Summary -------------- ¶1. (C) Several telecommunication sources told us President Obasanjo is encouraging bidders for Nigeria's state-owned telecommunications company Nigeria Telecommunications Limited (NITEL) to enter into joint partnership with Transnational Corporation of Nigeria (TCN). Insiders state TCN neither has the capacity nor experience to manage NITEL. Nevertheless, it appears that Obasanjo wants his pet corporation to enter into the telecommunications business on a large scale. End summary. -------------- 7 Bidders -------------- ¶2. (U) Nigeria's Bureau of Public Enterprises (BPE) announced the seven prospective investors for NITEL as Transcorp/British Telecom, Globacom, Afro Telecommunications Limited/Korean Telecomm, MTC/Celtel International, Investcomm, Telkom SA, and Etisalat. -------------- -- President Pushing Companies to Partner with TCN -------------- -- ¶3. (C) Managing Director Motorola Nigeria Raphael Udeogu told us President Obasanjo has been in discussions with Goodworks International, an American consulting group operated by former Ambassador Andrew Young, regarding Motorola's plans to bring United Arab Emirates-based Etisalat into the Nigerian telecommunications market. Udeogu said the President "encouraged" Etisalat to team with TCN in a joint partnership. Udeogu said TCN is using British Telecom (BT) as a vehicle to convince the general public that its bid for NITEL is a good one because BT will be its 'technical' partner. Udeogu complained however, that BPE's announcement was misleading in that BT has not yet agreed to partner with TCN. Vmobile Chief Operating Officer JP Snijders said TCN does not have the financial capital to purchase NITEL nor the technical capability to manage it, and therefore, needs a major international partner to provide technical and financial support. However, given President Obasanjo's affinity for TCN, Snijders prophesied that any NITEL privatization deal would likely involve TCN. -------------- Comment -------------- ¶4. (C) Obasanjo's alleged push for TCN involvement in NITEL's privatization further unveils the purpose and design behind the corporation. Already TCN has entered into the hotel business by acquiring the NICON Hilton Hotel in Abuja. Now, it is scrambling into a completely unrelated sector. The emergence of TCN in the various privatizations significantly undermines the latter. Privatization should be intended to move the economy out of government hands into a freer market. However, being the brainchild of the President and run by his friends, TCN is as close to a parastatal as a private company can get. To the extent that President Obasanjo is promoting the TCN as an essential in the NITEL sale, the process is not limpid nor is it a true privatization, but a hybrid with a more than residual government influence before and after the sale. End comment. BROWNE