China Unicom Group Bids $2.5 Billion for Nitel

By Paul Okolo and Mark Lee

Feb. 17 (Bloomberg) -- China Unicom (Hong Kong) Ltd. and its bidding partners may buy 75 percent of Nigerian Telecommunications Ltd. for $2.5 billion to enter the fastest- growing phone market in Africa.

New Generation Telecom Ltd., the group made up of Unicom, Minerva Group and GiCell Wireless Ltd., was selected as the preferred bidder for the state-owned phone company, Taiwo Osipitan, an official at the National Council on Privatization, told reporters in Abuja yesterday. Unicom, based in Beijing, is China’s second-biggest mobile phone company.

Unicom’s group outbid a $956 million offer from Omen International Ltd. and four shortlisted suitors including MTN Group Ltd., Africa’s biggest phone company. The market in the continent’s most populous nation has room to grow as more than half of Nigerians still don’t have mobile phones. India’s Bharti Airtel Ltd. is bidding for African wireless assets including in Nigeria as mounting competition at home pressures profit.

“It’s a good price for Nigeria,” Titi Ommo-Ettu, chief executive officer of Telecom Answers Associates, a Lagos-based research company, said in a phone interview.

Nigeria’s fixed-line and mobile-phone customers increased to 67.9 million in June from 65.5 million in January 2009, according to the Abuja-based Nigerian Communications Commissio

Financial Partners

“We have strong financial partners ready to fund” the business, Usman Gumi, an official from the New Generation group, said in an interview, without giving other details. Sophia Tso, a Hong Kong-based spokeswoman for Unicom, said she couldn’t immediately comment on the deal.

Nitel, as the company is known, has lost market share to private operators licensed since 2000, including MTN Nigeria Ltd., and its employees are currently owed 17 months of wages, according to the Bureau of Public Enterprises. A previous attempt to sell the company was annulled after Transnational Corp., a Lagos-based investment company, failed to comply with sale conditions.

Unicom shares rose 1.6 percent to HK$9.04 as of the 12:30 p.m. trading break in Hong Kong, compared with a 1.8 percent gain by the city’s benchmark Hang Seng Index.

Bharti, South Asia’s biggest mobile-phone company, this week offered $10.7 billion to buy most of Kuwait-based Zain’s African assets, a deal that would create one of the largest emerging-markets wireless carriers.

African Subscribers

The proposal, which doesn’t include Zain’s Morocco or Sudan businesses, would give New Delhi-based Bharti access to an estimated 42 million customers across 15 African countries from Nigeria to Uganda. The Indian company’s plan can’t include Zain’s Celtel Nigeria B.V. unit until an ownership dispute with Econet Wireless Holdings Ltd. on that business is resolved, Econet Chief Executive Officer Strive Masiyiwa said on Feb. 15.

New Generation beat five other bids for Nitel. On Feb. 8, the government announced that South Africa’s MTN, Globacom Ltd., Nigeria’s second-largest mobile operator, Brymedia (WA) Ltd., Spectrum Group and Omen International were short-listed as preferred bidders.

Bids unsealed yesterday were for 75 percent of Nitel and its mobile unit, known as M-Tel, according to a BPE statement. Omen’s $956 million was the next-highest after that of New Generation, it said.

New Generation must pay 30 percent of the purchase price 10 days after the winner is approved by the National Council on Privatization, headed by acting President Goodluck Jonathan, according to the BPE. The remainder must be paid 60 days after Jonathan’s approval.

The government plans to warehouse Nitel’s debt and settle it later using the proceeds from the sale of the company, Christopher Anyanwu, director-general of BPE, told reporters in Abuja yesterday.

From http://www.businessweek.com/