China Unicom (Hong Kong) Ltd. (CHU) is looking to enter Africa’s fastest growing telecom market Nigeria as the carrier has reportedly bid for a controlling stake in the state-owned telephone company Nigerian Telecommunications Ltd (NITEL) and its wireless subsidiary MTEL.
The second largest Chinese wireless operator has joined a consortium called “New Generation Telecoms” which has placed a $2.5 billion bid to acquire a 75% stake in the Nigerian company. The consortium, which also includes Dubai-based Minerva Group and Nigeria’s GiCell Wireless, has been selected as the preferred bidders for NITEL.
New Generation Telecoms (formerly Telefonica) has outbid Omen International and three other contenders including Africa’s largest phone company MTN Group. UK’s mobile operator Omen International has emerged as the reserved bidder with a bid price of $956 million. The bidding is subject to the final approval of Nigeria’s National Council on Privatization (NCP).
The consortium is expected to pay 30% of the bid offer in US dollars within 10 calendar days of receiving NCP’s approval, while the remaining 70% of the bid value is slated to be paid through electronic transfer or bank draft within 60 calendar days. Should the consortium fail to meet these deadlines, Omen International would emerge as the winning bidder.
NITEL, which has a staggering 600,000 base stations, was a monopoly in the domestic market till the liberalization of Nigeria’s telecom industry in 2001 which opened the doors to competition by attracting numerous operators.
NITEL has experienced a five-fold decrease in its fixed access line count since 2001 as a result of stiff competition and a beleaguered network infrastructure. Subscribers for its wireless arm MTEL also fell drastically over the same period. The Nigerian government has made several futile efforts since liberalization to sell the struggling company.
Nigeria has surpassed South Africa as the largest telecom market in Africa with more than 61 million subscribers. The country’s telecom market is poised to grow at a healthy pace over the next five years and is expected to trigger more competition as a result of the growing number of operators.
With a mobile penetration of roughly 42%, Nigeria offers ample room for growth. The country’s telecom market is expected to grow at a compound annual growth rate (CAGR) of 5.7% through 2013. This represents a lucrative platform for overseas investors such as, China Unicom.
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