1. What is NITEL Privatization?
2. How will the NITEL privatization be conducted?
3. How transparent will the privatization of NITEL be?
4. What are the benefits of the exercise?
5. What is telecom reform all about?
6. Why shouldn't government rehabilitate NITEL before selling it?
7. What are the plans for the labour force in NITEL?
8. Would NITEL be unbundled before privatization?
9. What is being done to fund NITEL's pension liabilities?
10. Will government retain some shares in NITEL?
11. Why is 51% being sold to a Core Investor?

1. What is NITEL Privatization?

NITEL privatization means transfer of a 51% controlling stake of NITEL's equity from government to private sector control.

2. How will the NITEL privatization be conducted?

It will be conducted via the initial sale of a 51% stake to a core investor in 2001, and subsequently:

• A public offer of shares to the Nigerian public.
• A cross border listing in some foreign stock markets.
• A sale of shares to NITEL staff via an employee share ownership scheme.

3. How transparent will the privatization of NITEL be?

As with other privatizations conducted by the National Council on Privatization (NCP), the NITEL privatization will be completely transparent. In the pursuit of privatization, transparency means strict adherence to probity, accountability and rules governing financial market transactions. It also means a level playing field, equal access to information, observance of competitive bidding process. The NITEL privatization will be characterized by all the above factors.

4. What are the benefits of the exercise?

Subscribers and businesses will benefit through:

• Greater access to phone services.
• Significant improvements in the quality of service.
• Greater competition that will eventually lead to lower costs.

Nigeria's economy will benefit from:

• Up to US$1 billion in new investments in the medium term.
• Increase in employment.
• Better trained work force via the acquisition of new skills and technology.
• Increased productivity.

5. What is telecom reform all about?

Telecommunications reform represents government's commitment to reinvigorate the sector by encouraging the development of a virile and modern telecom industry appropriate for the 21st century, and a strong and independent sector regulator, NCC.

The objective of the reform is to:

• Stimulate competition
• Improve telephone services,
• Ensure greater availability of phones to Nigerians
• Provision of qualitative choice to consumers
• Encourage the overall growth of the telecommunications industry in Nigeria.

6. Why shouldn't government rehabilitate NITEL before selling it?

• Worldwide, the private sector has demonstrated that it is a better and more efficient manager of businesses than governments.
• The private sector has better skills to ensure a rollout of millions of lines in a short period of time.
• Rehabilitation entails significant capital expenditure, and the private sector can attract better financing terms and ensure a more efficient procurement policy (purchase of equipment etc.) than can NITEL under government control.
• Without privatization, a major proportion of the financing required to finance rehabilitation will need to come from government, but a privatized NITEL can raise all the financing it requires from the owners or by borrowing.
• Government financing will require a reallocation of funding from other high priority sectors such as health, education, agriculture, and road development.

7. What are the plans for the labour force in NITEL?

Labour concerns are continuously addressed, and consultations are ongoing with the relevant unions on these concerns. Labour packages, which include severance pay, pension and gratuities will be integrated into the NITEL privatization documentation. Workers rights and obligations will also be included in the sales documentation, and must be respected by the core investor.

8. Would NITEL be unbundled before privatization?

NITEL will be sold as a single entity. However, some non core assets e.g. housing estates, schools and hospitals that are not essential to its business may be sold separately because they will not be of value to the core investor.

9. What is being done to fund NITEL's pension liabilities?

The Federal Government has identified a significant deficit in the NITEL pension fund. This deficit has arisen because over a long period of time, NITEL set aside inadequate funds for the fund. Government is committed to providing a solution to the deficit before NITEL is privatized. This will therefore not be an obligation of the core investor.

10. Will government retain some shares in NITEL?

Initially, only 51% share will be sold to a strategic investor and government will hold the 49%. Government is however committed to gradually selling down its remaining shares through a public offer to the Nigerian public and ultimately, on foreign stock exchanges. Government intends selling (over the medium term) its entire shareholding in the company.

11. Why is 51% being sold to a Core Investor?

NCP's assessments indicate that it is important that the core investor has not only management control of the company, but also a controlling equity stake sufficient to make critical decisions (in consultation with the government). The decision to sell 51% is recognition of that assessment, as well as an incentive to potential core investors. The 51% percent will enable the new owner necessary financial and operational independence to take strategic decisions affecting the company.