Transcorp clarifies plan to reduce stake in Nitel

Transnational Corp. (Transcorp), the majority shareholder in Nigerian Telecommunications (Nitel), on Thursday denied recent media reports that it will cede about 41 percent of its 51 percent holding in the embattled national carrier, but acknowledged efforts to seek a new investor for a smaller share.

"Transcorp would cede 27 percent of its current holding,” Transcorp Vice President of Public Relations Adedayo Ojo told the IDG News Service.

Ojo said that Transcorp, with its partner British Telecom (BT), is seeking new core investors. Transcorp is expected to cede 27 percent of its shares, leaving it with a 24 percent stake, Ojo said.

Media reports earlier this week said that Transcorp would eventually be left with only a 10 percent stake.

Transcorp took over as majority stakeholder from the federal government in 2006. Transcorp is holding on to its 51 percent stake until a new minority stakeholder emerges.

"As far as we (Transcorp) are concerned, we have 51 percent and they (the federal government) have 49 percent shares, respectively," Ojo said.

The effort to find another shareholder in Nitel is not new, Ojo pointed out.

After a meeting last December with the management of Transcorp, the government said another core investor should be found to help rescue Nitel from its declining fortunes.

Then on Feb. 16 , the government announced it was going to reverse the deal it had struck with Transcorp and dissolve the company's stake in Nitel. Information and Communications Minister John Odey in Abuja said the sale would be dissolved due to "Transcorp's failure to achieve the objectives of the privatization guidelines."

However, after meeting with Transcorp, the government two weeks later reversed itself again, allowing Transcorp to hold on to its stake until a new investor is found.

Although Transcorp paid about 63 billion naira (US$500 million) in November 2006 for 51 percent of Nitel, it has fallen short of fulfilling the balance fee of about $250 million, which would have brought its stake to 75 percent.

Meanwhile, Nitel has been hit by worker unrest. Nitel employees went on strike in mid-April to protest what they claim is management's failure to pay back wages. Although the strike was called off after eight days, disagreement continues over what Transcorp still owes employees.