Pentascope faces sack in Nigeria

Dutch Pentascope is about to be issued the red card by its Nigerian employers reports IT Edge news crew.

The Nigerian government may relieve Pentascope of its service before year-end if it accepts the counseling of an influential group within the National Council on Privatisation (NCP). Nigeria's Vice President, Atiku Abubakar, chairs the NCP. Pentascope, appointed Nitel's contract managers less than two years ago, was attacked recently by Abubakar for its inability to turn Nitel's fortune around as anticipated. The Vice President's stringent criticism capped series of attacks in the last three weeks against the Rein Zwolsman led management team. Incidentally, it was the NCP with Abubakar as chairman that approved the appointment of Pentascope in spite of disapproval of some highly vocal critics that the Dutch company did not meet the prescribed guidelines to manage Nitel.

Under the guidelines spelt out by privatisation midwife Bureau for Public Enterprises (BPE), a management consultant must have had experience in managing a network of one million lines and must have successful track record of growing networks in a developing country. Pentascope had no such experience.

However, removing Pentascope is only one out of three options Aso Rock (seat of power in Nigeria) is considering. The two other options are to expedite action on the sale of Nitel by March 2005 or tolerate Petanscope until its contract expires in the hope that the Dutch team would improve Nitel's fortunes. The last option is the least appealing and it is unlikely to enjoy any support. "Government would rather prefer that Nitel is sold out early next year," a BPE official said. Four BPE members are on the Board of Nitel.

At a press briefing to clean up its image in Lagos, some days back, and fight what it regarded as a "campaign of calumny against it, Pentascope claimed it was able to reach an understanding with the BPE during the bid. It convinced the BPE that its relationship with the KPN Royal Dutch Telecom was sufficient to make it win the bid against others at that time. Pentascope was at the media briefing with many documents to defend its case and blaming its inability to meet its set targets so far on "resistance from many quarters."

But obviously, the highly critical Lagos press was not impressed. 'Why has Nitel remained a moribund organisation in the face of stiff competition and what defence does Pentascope have against charges that its mismanagement of Nitel had made the telco record a loss of N40 billion?' Pentascope was not exactly forthcoming but owned up that it had insufficient information on Nitel when it signed the three years "farm-out management contract with the BPE." Chief of Planning Josbert Kester who claimed that Pentascope's original business plan for Nitel has been undermined by "bureaucratic bottlenecks and lack of funds" led Penstascope's team at the briefing.
The Dutch team complained that the change of BPE leadership at the commencement of its contract killed the initial rapport it had with the former BPE leadership headed by Mallam Nasir el Rufai, now Minister of the Federal Capital Territory, in a subtle hint at the lack of rapprochement between it and the new BPE leadership under Dr Julius Bala.

Besides, decision making processes at Nitel are considerably slower compared with what obtains at MTN and V-Mobile, Kester told his audience blaming Pentascope's inefficiency on extraneous factors that also include an absence of an Executive Committee as prescribed by the contract to manage Nitel's day-to-day that meets only once in a month and which has been dissolved twice; November 2003 and January 2004. There was a three-month gap before the new board was constituted and in which period everything was at a standstill within the telco and at a time when its rivals were busy expanding their networks to increase their market share.

But Nitel's biggest competition is not from its rivals. It is in the words of Kester, "financing." While MTN has been able to raise N139 billion (about ($1 billion) since 2001 and V-Mobile has been able to put some N98 billion (about $700 million) into its network, Nitel pitiable response has been a N2.8 billion (about $20 million) debt on its balance sheet. A N14 billion (about $100 million) credit facility for turnaround projects was suspended by the BPE in a curious reasoning that it was not in the place of a contract management team overseeing the affairs of a public telco in transition to execute projects financed by loans that would increase the liabilities of Nitel's prospective owners. The N14 billion would have been used to partly finance the 250,000 line expansion in Lagos and the rollout of other 750,000 CDMA lines in several cities including Lagos which was to get 150,000 of these lines.
It would appear Pentascope's argument is not striking the right cord within government circle and where it matters most. "I do not think Pentascope has anything to add again to Nitel. I think we should all be man enough to admit that we made a mistake bringing in the Dutch," a top government official and a member of the NCP told IT Edge in a phone conversation from Abuja three days after Pentascope had its interaction with the media in Lagos. The official ruled out the likelihood of Aad Loois, the suspended CEO of M-tel (Nitel's mobile arm), returning.
But the senior BPE official denied that there were plans within the NCP to sack Pentascope before December. The BPE and NCP, he said, were working with the Ministry of Communications (Nitel's owner ministry) to fine-tune the original contractual agreement between Pentascope and the BPE. Few months after the current Minister of Communications Chief Cornelius Adebayo assumed duty, he faulted the terms of contract as unduly tilted to favour Pentascope. "The minister wondered how a contract would give so much powers to a contractor that had no commitment outside bringing in so-called technical skill to manage an enterprise owned by over 100 million people," an aide of the minister told IT Edge.

Pentascope's entry certainly did not win it any friends and since it took over, it seems to have lost the understanding of those who endorsed its contract. One of its arch-critics remain the Senior Staff Association of Utilities, Statutory Corporations and Government Companies (SSAUSCGOC), an umbrella body that includes Nitel's workers led by its President, Mrs. Nkiru Peace Obiajulu and General Secretary Mr. Chubby Nwagbara. The association has severally condemned the deal with Pentascope as non-transparent. Recently, it took up the battle against Pentascope afresh accusing it of being inexperienced and incompetent in managing Nitel in separate letters published by several print media and addressed to both President Olusegun Obasanjo and Nitel's CEO Zwolsman.

The workers alleged that Nitel lines had depleted from 450,000 in 2003 when Pentascope took over to 288,000. Further still, it accused Pentascope of financial recklessness that has left the once buoyant Nitel in debt. Besides, there are accusations of reckless spending on public relations. A media meeting at Sheraton Hotel, Lagos to announce Pentascope's plans to expand the Lagos network by 250,000 lines some months back reportedly got the Media Consultant Richard Ikiebe N50 million richer. Ikiebe's new brief to launder Pentascope's image is costing the Dutch team more "and Nitel would pay for this unnecessary jamboree," one Nitel official said in Lagos.
But in defence, Pentascope is accusing the SSAUSCGOC of being used by "those who have ulterior motives for Nitel and whose personal interest is threatened by our presence [Pentascope]." Kester led his team in Lagos to give a written response thus: "The actual operational result over 2003 was a loss of N5.1 billion, less than the projections [in its business plan, Pentascope's projection was a N7 billion loss for 2003] In addition, Nitel made provisions for unfunded pensions (N6.2 billion) and a write-off for long outstanding debts (N7.8 billion) on its Profit and Loss account. This was necessary to clean-up the balance sheet in view of Nitel's planned privatisation."

How far this defence would go to win Pentascope public sympathy or the support of Nitel workers is uncertain as accusations fly around. What is certain is that the Presidency would decide on the fate of Pentascope before Rein Zwolswan, CEO of Nitel and Vincent Maduka, chairman of Nitel take leave of office for Christmas.

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