British Telecoms, others eye V-Mobile
By Sonny Aragba-Akpore,
Asst. Communications Editor
NIGERIA'S telecommunications sector remains the toast of investors across the globe, investigations have revealed.
For the country's second largest telecommunications operator, Vee Networks Limited, the sun has continued to shine, despite the recent premature termination of its management contract with the Vodacom group of South Africa.
The foreign partner two weeks ago terminated the five-year contract after only two months of operations.
But new suitors have appeared for the firm. They include the United Kingdom's largest network operators, the British Telecoms Plc (BT), Orascom of Egypt and Mobilcom Telecoms of Australia.
Besides managing and or operating NigeriaÕs second largest GSM company, the firms have also indicated interests in investing wholly or through their financiers "huge funds" in the Nigerian operations.
Specifically, BT says it is prepared to manage the Nigerian concern, Òincluding deploying the use of its BT brands and services."
Two global equipment vendors, Ericsson of Sweden and Motorola of the United States (USA), have also indicated interests in Vee Networks with the provision of equipment Vendor financing to the Nigerian operators.
Both Ericsson and Motorola have been involved in Vee Networks network roll out and have indicated interests to continue supplying equipment to the Nigerian firm on credit to ensure the accomplishment of its network roll out programme.
The Guardian learnt that some top officials of Vee Networks just returned from Sweden where they, among others, discussed a fresh N3.5 billion ($25 million) equipment supplier's facility with Ericsson of Sweden. This facility is besides the on-going N6.4 billion ($45 million) Vendor financing facility.
"We are optimistic that we will secure the fresh $25 million facility and this will come to a round figure of $70 million facility from Ericsson alone," a Vee Network top official confirmed to The Guardian at the weekend.
MIGA, a global insurance consortium has also agreed to provide a political risk insurance cover in favour of Ericsson in the deal with Vee Networks.
Deutsche Bank of Germany will undertake the no risk guarantee for deferred payment to free up more capacity for Ericsson in the deal.
MIGA's entry into Nigeria and the general jostle for the country's telecommunications sector by multinationals underscores the International Telecommunications Union (ITU's) assessment that "Nigeria is investors' preferred destination in Africa", in the African Telecommunication's Indicators 2004" released in Cairo, Egypt, last month.
In his correspondence with managing director, Econet Wireless Nigeria (EWN), BT's General Manager, in charge of Middle East and Africa, Mr. Brian Armstrong, stated that BT was acting based on the information available to it and "hereby confirm our interest in exploring possible roles for BT in operating/managing EWN potentially, including the use of our brands and services."
The letter added: "BT confirms and reserves the possibility of investing in EWN directly or through financial partners, subject to business case assessment and standard BT governance procedures should this be desired by EWN and warranteed by the business relationship to be explored."
The BT said that its offer was "subject to evaluation of documentation and data to be provided by EWN."
It added: "We should be grateful to receive a copy of the information memorandum and any other relevant documents that might help us to evaluate your operation and our possible contribution thereto."
The BT is returning to Nigeria 20 years after it helped to repackage the Nigerian Telecommunications Limited (NITEL) as a wholly-owned government company. The British national carrier had in 1984 severed the Post & Telecommunications (P&T) and merged it with the then Nigerian External Telecommunications (NET) to form the Nigerian Telecommunications Limited (NITEL).
It was a monopoly operator in Britain too just like NITEL. BT also had a subsidiary mobile phone operator, BT CellNet, a service which it pioneered in the country but later sold to a consortium now known as MM02.
However, the BT's re-entry into the mobile telephony turf recently shows that it is now prepared to be a part of the juicy mobile sector especially at a time when fixed networks attractions are diminishing.
The BT now operates as a virtual network operator in the mode of Virgin Mobile. Besides this, it has agreements with T-Mobile and Vodafone as part of its strategy to re-enter the global mobile market.
Motorola's involvement in the equipment vendor financing chain is in conjunction with the Africa Export-Import Bank (AFREXIM) in Cairo, Egypt.
While the original $50 million equipment supply facility has been fully prepared by Vee Networks to Motorola, another $100 million Note Issuance syndication for further radio equipment supply is being concluded.
Of this amount, AFREXIM bank is said to have paid about $40 million in advance," to enable Vee Networks expand its network while the loan syndication is being finalised," a Motorola source confirmed to The Guardian in Lagos at the weekend.
Vee Networks, formally Econet Wireless Nigeria (EWN), has had it good even among local banks.
Early last year, it successfully restructured its operations through about N30 billion in short-dated multiple facilities involving 14 local banks and financial institutions. The loans were broken into a four-year medium-term facility under common terms of agreement.
The local banks that were involved included First Bank, Zenith Bank, Intercontinental Bank, Kakawa Discount House, EIB International, Lead Bank, UTB, First City Monument Bank, Guaranty Trust Bank, National Bank, MBC International Bank, Ecobank, First Trustees, Standard Trust Bank, among others.
Some industry operators, however, believe that it is too early for Vee Networks to accept another manager, in view of the premature termination of the Vodacom management contract.
But sources close to the board say that in the new deal, Vee Network managers will still be given precedence, although the company needs the money and the equipment to expand its network.
A source said: "The offer by BT, Orascom and Mobilecom is tempting. The board is said to busy tinkering with the offer before presenting same to the shareholders, even though the general opinion among some top board members points to the reality of an organic and focused home-grown company with international company."
Of the three multinational operators jostling for the Vee Networks, Orascom is not particularly new as it had in the past expressed strong interest in the former Econet Wireless Nigeria.
It was one of two that conducted due diligence on EWN last year with a view to becoming a core investor in the Nigeria firm but lost to Vodacom.
It also jostled for one of the GSM licences on offer in Nigeria January 2001, in collaboration with MSI-Celtel, but lost.
It also eyed the state-owned M.Tel in 2002, and again lost out.
Orascom and Econet Wireless International (EWI) of Zimbabwe were at loggerheads over who should run EWN before the board of EWN opted for Vodacom.
Orascom is the largest operator in Middle East and Africa with services in Internet and Satellite transmission, technical management and telecom support services as an integrated telecoms conglomerate.
It has 10 licences covering that region including Egypt, Algeria, Tunisia, Pakistan, Congo, Chad, Zimbabwe, among others.
Mobilcom Telecommunications Group dominates the telecoms environment in Australia, and New Zealand.
This is their first major in-road into Africa.
