The Nigerian government will settle a NGN17 billion (USD114.9 million) debt owed to workers of state-owned telco Nigerian Telecommunications (NITEL), according to allAfrica. The Bureau of Public Enterprises said in a statement that the debt will be paid from the proceeds of bonds and the sale of businesses that are not key to NITEL’s operations.
The announcement follows months of strikes by employees of NITEL and its mobile subsidiary, M-Tel, due to the company’s failure to promptly settle salary and pension arrears. The strikes led to the shutting down of NITEL’s main source of income, underwater fibre-optic cable SAT-3, leaving many businesses in Nigeria without a telecoms service. According to the telco, the strikes have also resulted in customers switching to rival networks such as the local unit of the MTN Group, which claims to be the largest mobile operator in Africa.
The government sold a 51% stake in NITEL to local firm Transnational Corporation in 2006 for USD500 million, and last year asked the company to reduce its stake, citing a failure to meet targets. The shareholders of Transcorp approved the divestment of part of its shareholding in the telco in February 2009, and announced that the sale process would happen gradually over the next six months. The government also plans to shed part of the state’s holding in NITEL to bring in a new controlling shareholder, which it anticipates will happen in April 2009.