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Nitel sacks Pentascope, Gets technical board
The management contact of Nigerian Telecommunications Limited (Nitel) with Pentascope of the Netherlands has been terminated by the Nigerian Federal Government due to incompetence, failure to meet performance targets and an
intended increase of the annual fee from US$10 million to US$16 million. Pentascope is the Dutch telecom consultant firm, which had been running the national network operator Nitel since March 2003.
It was reported that the decision to terminate the contract was taken by Nigeria's President Olusegun Obasanjo.
The contract cancellation is seen as a positive development in view of Pentascope's inability to improve the performance of Nitel, since it took over. It is also seen as an opportunity to position Nitel for privatisation. Pentascope secured the three-year management contact in March 2003 after the failure of the privatisation exercise in which the preferred bidders the IILL Consortium were unable to pay the $1.1 billion bid price.
As a telecom consultant, Pentascope was responsible preparing Nitel for privatisation, as well as improving the performance of the Nitel network by increasing the number of lines and maintaining the existing infrastructure. But did Pentascope perform in the area of Telecom management? A telecom audit would reveal the failure. In the opinion of most subscribers and players in Nigeria's telecom sector, Pentascope failed grossly, especially in the area of boosting network growth and performance. If you can't improve performance where is your expertise in telecom management?
Pentascope, was expected to have the expertise to manage the operations of Nitel till a core investor was identified. There are however question marks as to why Pentascope was chosen as it had never managed a network of about a million lines - which was a key requirement. A telecom audit should reveal the misplaced expectations. Some haven even gone as far as to label the transaction as telecom fraud. Investigations indicate that it did not have the experience or expertise to manage a Network of Nitel's capacity. So why was it chosen as the management contractor for Nitel? Will there be a telecom audit? The final straw appeared to be its disagreement with the Federal Government over the management fee of NITEL.
In a related development, the boards of both NITEL and its subsidiary in the Global System for Mobile Communications (GSM), M-Tel, were dissolved by Nigeria's Federal Government and a five man technical board has been setup to manage the operations of Nitel. Members of the technical board are the Minister of Communications, Chief Cornelius Adebayo (Chairman), the Director General of the Bureau of Public Enterprises (BPE), Dr. Julius Bala (Vice Chairman), the Director of Power and Communications, BPE Mr. Benjamin Dikki, the Chief Executive Officer (CEO) for NITEL, Mr. Albert Mashi and the Chief Executive Officer (CEO) of M-Tel, Mr. Edwin Moore Monife.
Already 21 companies have expressed interest in acquiring the 51 per cent equity in Nitel as the core investor. A core investor should be chosen by June 2005. The main agenda of board is to prepare Nitel for privatisation. Will the board add value and remove the inefficiencies stalling progress in Nitel? It remains to be seen.
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