Transcorp defends plans for Nigeria's Nitel

Responding to claims that it has not made necessary investments in Nigerian Telecommunications (NITEL), Transnational Corp. (Transcorp) has disclosed that it has spent about 5 billion naira (US$42.4 million) on the company since it took over as majority stakeholder in 2006, and plans more expenditures in the next few months.

Transcorp is also denying allegations that it plans to sell its stake in the South Atlantic Telecom 3 (SAT-3) cable system, which acts as Nitel's international gateway, to undisclosed private parties.

The Nitel statements come in the wake of allegations by workers that Transcorp has mismanaged and neglected the company.

Nitel employees went on strike in mid-April, closing down telecommunications installations including SAT-3, claiming that Transcorp had failed to live up to an agreement to pay wage arrears. Although the strike was called off after eight days, disagreement continues over what Transcorp still owes employees.

The strike was called off in the interest of the nation and telecommunications users in the country, as it had begun to adversely affect other telecom services that depend on Nitel to deliver to end-users, according to Nitel employees.

In the wake of the strike, and in response to criticism, Transcorp vice president of public relations, Adedayo Ojo, said in a press release that the parent company has spent 5 billion naira more in investments on Nitel and its Nigerian Mobile Telecommunications (M-Tel) arm, above the initial $500 million to acquire 51 percent of Nitel. The 5 billion naira was spent on operating expenses while the company developed a turnaround plan for Nitel, he said.

In addition, though Transcorp has yet to make any profit from Nitel, Ojo said, there has been no attempt to divest SAT-3.

"Transcorp has not taken a kobo from Nitel till date and there was no attempt whatsoever to sell SAT-3," he said.

An interim revitalization measure will inject an estimated 18 billion naira into Nitel in the next few months, depending on when the Nitel board gets approval from the government. Ojo added that Transcorp was finalizing a new technical agreement when, in February, the government announced a reversal on the sale of Nitel. The government announced that it was going to dissolve the deal it had struck with Transcorp to make provisions for a new ownership structure. However, the government then reversed itself again, and Transcorp was allowed to hold on to its 51 percent stake in Nitel.

The 18 billion-naira revitalization plan should go forward soon, Ojo said.

"The plan is awaiting approval from Nitel's board, in which the Federal Ministry of Information and Communications is represented," he said, stressing that there is no basis for Transcorp to differ with the government because authorities understand the state of the company's business.