allAfrica.com: Nigeria: Without a Bid, FG Considers Another National Telecoms Carrier (Page 1 of 1)

The Federal Government, through the Nigeria Communication Satellite (NIGCOMSAT), may have begun moves to set up another national carrier without an open bid process even as it is arranging to do away with its stake in NITEL.

Nigeria currently has two national carriers - NITEL and Globacom.

THISDAY gathered yesterday that NIGCOMSAT, launched into space in China on May 17, 2007 and conceived to take care of the integrated communication infrastructure of the security agencies including the State Security Service (SSS), Nigeria Intelligence Agency (NIA) as well as the Office of the National Security Adviser (NSA), is at the forefront of this latest development.

China is the technical partner and is set to lend Nigeria $500 million for the project through its Exim Bank.

However, after the security agencies must have taken their own spaces on the satellite, some portions of the infrastructure will be sold to telecoms operators. GSM operators such as MTN, Zain, Globacom, Visafone, Etisalat will have the opportunity to use the satellite if they subscribe to it.

NIGCOMSAT, which is a project under the Ministry of Science and Technology, was launched as a security project because for a nation to own a satellite, it automatically becomes such.

NIGCOMSAT was never planned to be used for commercial telecommunications business.

But THISDAY investigation revealed that there are plans to use the infrastructure of NIGCOMSAT for commercial telecommunications, which will be run by the government and ZTE, Chinese telecommunications firm with the intention of rolling out lines across the country with the name of NIGCOMSAT and competing with the private telecommunications operators (PTOs) as well as GSM operators.

NIGCOMSAT is said to be building a telecommunications network that would provide voice and data services with a host of other value-added services.

THISDAY gathered that the proposal on the project is awaiting the approval of President Umaru Musa Yar'Adua.

Already, towards the actualisation of the NIGCOMSAT telecoms operation, a loan of $500 million is being arranged with the China EXIM Bank, for which one of the top banks in the country is providing a guarantee. But a sovereign guarantee is also expected to be secured.

THISDAY learnt that the Finance Minister, Dr. Sham-suddeen Usman, is not disposed to granting such, as "the Finance Ministry cannot issue out sovereign guarantee anymore because we do not need it anymore. We have paid our debts and any project that is not commercially viable enough there is no point in that person going into it," said a government official.

It is noteworthy to say that NIGCOMSAT, as part of its management of the satellite, is expected to market transpondences to commercial and private telecoms operators and its strength lies in provision of bandwidth for end users.

Essentially, the original mission statement of NIGCOMSAT is centred on research and bandwidth and service provision. It is considered difficult to break into mainstream telecommunications provision with the huge demands of human resource and management experience and capacity.

The move by the managers of NIGCOMSAT to venture into commercial telecoms business, using the nation's satellite communication facility, has been described as negating the ideals of NIGCOMSAT and the reasons for which the communication satellite was launched.

This is coming at a time the Federal Government is on the verge of getting a fresh core investor for Nigeria Telecommunications Plc, the first national carrier, through the Bureau of Public Enterprise (BPE) after the government reviewed the sale to Transnational Corporation Plc (Transcorp), which had paid about $500 million for 51 per cent government's shareholding in the company in 2006. The Federal Government had retained 49 per cent.

The shareholders have however mutually consented to restructure the current shareholding and admit a core investor who will be offered a 51 per cent stake in the company.

The move by the NIGCOMSAT managers has been criticised by experts and observers in the telecoms industry as they said the Federal Government does not have to be involved in commercial telecommunications business again.

An industry expert queried: "Why should the government be involved in telecommunications business? When they have given out licences, why should government then revert to start competing with private in the business that you have already said you will not do?"

Another posited that even if the infrastructure is to be used at all, NITEL, when fully privatised, could approach NIGCOMSAT and buy a transpondence from it, for its commercial use.

The expert argued that, it was wrong for the Federal Government to establish a new commercial telecommunications operation and use the federal might to take an undue advantage of NIGCOMSAT infrastructure meant for security operations.

"They can't use it for NITEL. NITEL used to have South Atlantic Transmission Cable 3 (SAT3), so the highest NITEL will do now, is to buy one transpondence from NIGCOMSAT and just use it as spare facility redundantly," said the expert

SAT 3, which has as signatories, over 65 countries, is owned 7.5 per cent by the Federal Government but because NITEL was state-owned company, it was managing the stake as at that time. However, in the current scheme of things, SAT 3 is not part of NITEL and as such NITEL will have to subscribe to NIGCOMSAT.

A Presidency source told THISDAY: "If NIGCOMSAT is not stopped, it means government is coming back, and then NITEL, BPE has complicated matter for encouraging government to transfer 15 per cent of NITEL share. Government share is 49 percent left in NITEL, instead of BPE to ask Federal Government to take 20-25 per cent of the share or even 30 per cent to the stock exchange, BPE is now quickly asking government to take out of their share to give to NIGCOMSAT."

"What is the meaning to transfer some part of government shares from one hand to another government agency? So they now say NIGCOMSAT has 15 per cent. For what purpose?".

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