NITEL: The Number You Are Calling is Not Available

Published By Jerry Adesewo Last updated Sep 30, 2024

NITEL: The Number You Are Calling is Not Available

By Prince Charles Dickson PhD

It was in 2002 when the Obasanjo-Rufai group moved to auction NITEL and sold it to the International London Limited (ILL) for $1.2 billion. But, it turned out that the company was hastily put together by a gang and was just an emergency vehicle later discovered to be unqualified in all ramifications – ILL had no such fund and sourced the money locally, most of it from the First Bank, and only raised 10%.

When the deal fell through, the BPE (led by Nasir el-Rufai), handed over NITEL to a company to manage it. It was called PENTASCOPE.

Pentascope was registered on January 1, 2002, a public holiday worldwide, with a workforce of only eight persons, including its janitor. It was not registered in Nigeria to do business, as required by the Companies and Allied Matters Act.

In his article, The rape of NITEL, Owei Lacemfa said, “The transaction (with Pentascope) brought down the First Bank management, and the government had no choice but to annul the messy deal.”

Meanwhile, Pentascope did not meet any of the criteria the Bureau listed in its advertisement. The pre-qualification criteria demanded that:

“Interested managers MUST be international telecommunications operators and MUST demonstrate, one, evidence of having installed and managed at least a million telephones; two, a successful track record of expanding a telecommunications network in a developing country; and three, sufficient management resources to grow NITEL and enhance shareholder value.”

Among the revelations from a February 2005 probe by the House of Representatives Committee on Communications that probed the appointment of Pentascope as management contractor to NITEL is the evidence by former Chairman of NITEL Board, Aneze Chinwuba that showed that when the company’s team went to Amsterdam to check the capability of Pentascope to handle the management deal, it discovered that the contractor’s office was located inside an abandoned church with a staff strength of eight people “including a janitor”.

According to Chinwuba, a total of $9.35 million was paid to Pentascope during the management period. He also testified that the company approved the payment for itself from NITEL’s coffers without any supervising authority, even when NITEL was incurring huge losses.

Chinwuba further told the committee that after seeing that Pentascope had neither the technical nor the financial capacity to manage NITEL (being a consultancy firm with only three months of experience in the communications field), he wrote a report advising that the Dutch firm should not be given the contract.

Between April 2003 and March 2004, Pentascope had squandered a gain of ₦15 billion, which it inherited to record a loss of ₦19.15 billion. Also, turnover had dropped to ₦41 billion from ₦53 billion. In those 23 months, the working NITEL lines had fallen from 553,471 to 291,000.

Nigeria lost over ₦100 billion in that deal.

Children of this generation, the Gen Zs won’t understand this, better still they don’t know that they live in a country where a government official once said that the telephone was not for the poor. So, I will tell you the short story of NITEL, a two-decade-old story.

Nigerian Telecommunications Limited (NITEL) was Nigeria’s national telecommunications provider, established in 1985 through Decree No. 9 of 1984. It was once Nigeria’s national telecommunications carrier and the country’s primary provider of telephony services. Established to connect Nigeria to the world. The company merged the Telecommunications Division of the Post and Telecommunications Department (PTD) which managed domestic telecommunications, and the Nigerian External Telecommunications Limited (NET) which was responsible for external communications, both government-owned entities.

This merger was aimed to streamline Nigeria’s telecommunications services, making them more efficient and responsive to the growing needs of a rapidly developing country. NITEL became the country’s sole provider of telecommunications services, including fixed telephone lines, telegraphy, and telex services.

The initial objectives were basically to; a. Provide efficient telecommunications services. b. Expand telephone services nationwide. And c. Improve international connectivity.

During the 1980s and 1990s, NITEL held a monopoly on Nigeria’s telecom market. The company was responsible for the installation, operation, and maintenance of both local and international telecommunications services in Nigeria. It controlled all fixed-line telephone services, long-distance calls, and international communications.

NITEL’s monopoly, however, came with challenges:

Inadequate Service: NITEL was plagued by inefficiencies, outdated equipment, and poor customer service.

Limited Infrastructure: With low investment in infrastructure, the telecom system in Nigeria was severely underdeveloped, with telephone penetration rates well below global standards.
High Demand, Low Supply: The waiting list for telephone lines was notoriously long, with some customers waiting years to get connected.

Corruption and Mismanagement: These were recurring issues within the organization, further compounding its problems.

But with all the problems NITEL managed to introduce digital exchanges, increasing capacity and quality. The company expanded services to rural areas, and International connectivity improved through Satellite earth stations and Fiber optic cables.

Liberalization and Competition though came and with it, a technological Lag and the emergence of Mobile Telephony. The global telecommunications industry was undergoing rapid transformation, with the rise of mobile telephony and digital technologies. Unfortunately, NITEL failed to keep up. Its inability to modernize its infrastructure or invest in new technologies left it lagging far behind in a rapidly changing industry.

In 2001, Nigeria began to liberalize its telecom sector with the establishment of the Nigerian Communications Commission (NCC), which facilitated the entrance of private telecommunications operators like MTN, Econet (now Airtel), and Globacom. These mobile operators quickly capitalized on NITEL’s inefficiencies, offering more reliable services and gaining significant market share.

NITEL’s monopoly ended, and the company faced steep competition in a liberalized market.

Faced with mounting financial difficulties and poor service delivery, the Nigerian government attempted to privatize NITEL several times. Between 2001 and 2010, there were multiple unsuccessful bids to sell or restructure the company including the one I wrote of above:

2001: The first attempt at privatization, where the Nigerian government sought to sell a 51% stake in NITEL, was unsuccessful.

2003: The government made a second attempt to privatize NITEL, but this also fell through due to disagreements over the valuation of the company.

2006: The government sold a 51% stake in NITEL to Transcorp (Transnational Corporation of Nigeria), but Transcorp struggled to manage the company, and service delivery did not improve. By 2009, the government took back control of NITEL due to Transcorp’s failure to meet its obligations.

2010: Further attempts to privatize NITEL and its mobile subsidiary, MTEL, continued, but these too faced challenges, including regulatory issues, investor reluctance, and NITEL’s rapidly declining customer base.

By the 2010s, NITEL had become virtually obsolete. Its infrastructure was outdated, and its fixed-line services were almost non-existent in many parts of the country. Mobile operators had taken over the telecommunications landscape in Nigeria, leaving NITEL with an insignificant market share.

In 2015, the National Council on Privatization approved the sale of NITEL and MTEL to NATCOM Development and Investment Ltd for $252 million. The deal marked the final privatization of NITEL, ending years of failed attempts to restructure or revive the company.

NATCOM rebranded NITEL as NTEL with the hope of reviving the company as a 4G LTE mobile operator. NTEL launched services in 2016, focusing on data and voice services in key cities like Lagos, Abuja, and Port Harcourt.

It still died…

NITEL’s rise and fall reflect the challenges of managing a state-owned enterprise in a rapidly evolving and competitive industry. Once seen as a symbol of national pride, NITEL became a cautionary tale of how poor management, lack of investment, and failure to adapt to new technologies can lead to the collapse of a once-dominant entity.

Despite its decline, NITEL played a critical role in the early development of telecommunications in Nigeria. Its legacy remains a key part of the country’s infrastructure history, and the lessons learned from its challenges continue to shape the regulatory and market environment in Nigeria’s telecommunications industry today.

You might want to think that this is just about NITEL, it is not about this institution but largely about a nation’s Inefficient management, Corruption, Bureaucratic bottlenecks, Lack of investment, and Technological stagnation.

And we have refused to learn that State-owned enterprises require effective management, and that adaptation to technological changes is crucial. Our leaders still don’t understand that competition drives innovation and efficiency, and our scary public looting of the state treasury is anti-transparency and anti-accountability.

NITEL’s final collapse however led to increased competition, improved services, and reduced tariffs. Should certain national treasures and structures die before Nigeria moves forward—will Nigeria win—Only time will tell.

—

Prince Charles Dickson PhD, is the Team Lead at the Tattaaunawa Roundtable Initiative (TRICentre), Development & Media Practitioner, Researcher|Policy Analyst|Public Intellect|Teacher
234 803 331 1301, 234 805 715 2301
Alternate Mail: pcdbooks@yahoo.com
Skype ID: princecharlesdickson