Is Vodafone eying Nigerian opportunity?

Having expressed more than a passing "interest" in Nigeria last November, Vodafone's CEO, Vittorio Colao, might be keen to better understand the offer for bids for the former monopoly Nigerian telecoms operator Nitel. The government, and the existing major shareholder, Transcorp, have agreed to "select a new core investor who would have the requisite operational, managerial, technical and financial resources to take over Nitel (fixed) and its mobile subsidiary, Mtel."

Albeit that Colao noted the country was one of very few such large markets with a decent GDP, young population and "the classic conditions for being interesting for Vodafone," Nitel is not without its issues.

Nigeria came close to selling Nitel in late 2005 to Egypt's Orascom Telecom, which had experience in countries with infrastructure problems, but rejected the firm's US$256 million offer as too low. The local company Transcorp then acquired 51 per cent of Nitel for US$500 million in August 2006, but the telco's infrastructure had deteriorated so badly due to corruption and mismanagement that Transcorp could not raise the cash to turn it around.

The upside for Vodafone is that Nigeria has overtaken South Africa as Africa's biggest mobile market with more than 62 million subscribers, with a mobile penetration rate of just 42 per cent and a population of 150 million people. However, likely rivals include South Africa's Telkom, which is in the process of selling its 50 per cent stake in Vodacom to Vodafone, and would have a war chest of more than 10 billion rand and has stated an intention to become Africa's leading telecoms provider; the South African cell phone operator MTN's Nigerian unit has recently stated it could make further acquisitions as it grows in Nigeria.

However, the company also requires considerable rebuilding. Since Transcorp took over the management of the now heavily indebted Nitel it has lost the majority of its fixed-line users--now less than 100,000--and almost all of its 1.3 million mobile subscribers.

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Related stories:
Vodafone stalks Nigerian operator
Vodafone's African ambitions threatened
Africa lures telecoms with promises of untapped bounty
Vodafone seals Vodacom deal, but faces new competition

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