Telecommunications: private companies take on NITEL.

Although the government seems confused about what to do with its giant but inefficient telecoms company, NITEL, it has opened the doors to private providers.

One major factor obstructing the modernisation of Nigeria's telecommunications is the lack of consensus within government about what to do with the industry. For example, in the 1998 budget break-down, the Minister of Finance, Chief Anthony Ani said: "Government has now resolved to commence the privatisation of public enterprises in 1998 in line with the Vision 2010 programme." He then added: "Specifically, government will in 1998 privatise NITEL and reorganise NEPA for privatisation." That was in January.

But in February, a key official of the government, eminent economist and chairman of the National Economic Intelligence Committee (NEIC), Professor Samuel Aluko seemed to make a complete U-turn. "We are not thinking of privatising those things (meaning NITEL and NEPA) you are mentioning in the press ... if you want to set up your own NITEL, go and set up your own NITEL! I am opposed to privatisation, and my committee is also opposed to it," Professor Aluko told the press.

It is such discordant notes that confuse investors. On the whole it appears that in spite of the furore about privatising the giant but inefficient NITEL, what is really happening is deregulation of the sector. Indeed, in the same 1998 budget, it was stated that "the private sector can compete with the public sector and any investor may invest in telecommunications, electricity generation, distribution and transmission, hotels and tourism, and in any other aspect of enterprises currently being undertaken by government."

Investors

The first private operator to enter an interconnection agreement with NITEL has been Multi-Links which signed an agreement on October 7, 1997. Soon after, EM International Systems Ltd. (EMIS), signed on November 18, 1997. In December 1997, Intercellular joined the ranks of private telephone operators. All currently operate in Lagos, whilst planning to expand to other parts of the country, and have been joined by a further three private operators: Mobitel, Communications Infrastructure, and Independent Telephone Network. Apart from these, most banks in Nigeria, for instance Diamond Bank, and some oil companies, operate their own private telecommunication through Very Small Aperture Terminals (VSA).

Communications Infrastructure is owned by an Israeli construction company, HFP Engineering Ltd., and operates as an agent of NITEL. Communication Infrastructure is providing an initial 3,000 digital lines which will be expanded to 100,000 within Lagos alone. But it has a national licence which allows it to cover Abuja and other major state capitals. EMIS transmits its signals through wireless technology. Mobitel switch has 10,000 digital lines using the Time Division Multiple Access technology supplied by MITEL of Canada. Intercellular, backed by Motorola Inc of the United States has 10,000 lines expandable to 150,000 lines.

With the contribution of private telephone operators, Lagos subscribers at least will soon heave a sigh of relief at no longer having to combat NITEL's dearth of lines, phones which stay dead for years and delayed dialling tones.

The problem, however, is that the cost of the private phones is high. Multi-Links phones cost between N130,000 and N170,000, EMIS between N130,000 and N150,000, and Intercellular charges between N100,000 and N150,000. NITEL's cost between N50,000 and N70,000. The subscribers, however, expect that by the time more operators come into the sector, competition will bring down the price.

Meanwhile a second network carrier is planned by NITEL. Foreign telecommunications companies that have shown interest in partnership include British Telecommunication plc. One of the factors likely to block its chances however is controversy over a debt of [pounds]30m, which BT allegedly owes NITEL. Another may be the rupture in diplomatic relations between Nigeria and some EU countries including Britain.