BT Terminates Agreement with Transcorp
• IPO undersubscribed
From Ijeoma Nwogwugwu in Abuja, 04.10.2007



British Telecom (BT) has pulled out of the technical services agreement with Transnational Corpora-tion Plc (Transcorp) for the management of NITEL and its mobile subsidiary, MTel. Transcorp, with BT as its technical partner had acquired a 51 per cent stake in NITEL last year under the privatisation exercise handled by the Bureau of Public Enterprises (BPE).
But in a letter to Transcorp, BT cited the unavailability of working capital needed to turn around NITEL and MTel, and the lack of adherence to corporate governance principles by the companies’ management and their boards as the reason for its decision to withdraw from the agreement.   
The decision by BT to terminate the technical services agreement it has with Transcorp could not have come at a worse time for the Nigerian conglomerate which is yet to overcome the disappointing returns from its initial public offering (IPO).
Capital market analysts estimate that the Transcorp’s IPO may have been undersubscribed by as much as 70 per cent.
Under the technical services agreement, BT was expected to have provided technical and managerial expertise to Transcorp for one year in the first instance, but the contract comes up for review by both parties every six months.
In exchange for its services and upon meeting key performance benchmarks that had been agreed under the contract, BT was supposed to have been paid a fixed fee and a performance bonus by Transcorp.
In addition, salaries of its two contract staff seconded to run NITEL and MTel for the duration of the technical services agreement would have been met by Transcorp.
Transcorp had also committed to raising substantial funds from banks and the capital market to inject into both telecom firms for their network expansion programmes and in order to meet other commercial obligations.
In that regard, Messrs Steve Brookman and John Weir were seconded by BT as CEOs of NITEL and MTel respectively in November last year to oversee their day to day operations.
Ms Funke Okpeke, meanwhile, was employed by Transcorp and appointed Chief Operating Officer (COO) of NITEL.
But ever since Transcorp took over NITEL, and by extension its mobile subsidiary in November, the reconstituted boards of both companies have been enmessed in internal wrangling among its members, on the one hand, and disagreements with the British CEOs on how best to manage the companies on another.
Specifically, John Weir, who was appointed CEO of MTel, has been at logger heads with the company’s chairman, Gboyega Olulade and other board members over the selection of equipment vendors for the company’s network expansion programme.
Weir was said to have shown a preference for the appointment of Huawei and Motorola, while Olulade was pushing for Ericsson and other vendors. Weir also took umbrage over the appointment of the new Chief Technical Officer (CTO), Davidson Anene, by Olulade without his input, and is said to have refused to recognise Anene as the company’s CTO.
This got to a head last month when MTel’s board comprising Transcorp members and Federal Government representatives terminated Weir’s appointment and gave BT four weeks within which it was expected to send his replacement.
His dismissal did not sit well with BT which was already getting disenchanted with Transcorp’s inability to deliver on its promise to provide working capital for NITEL and MTel, thus compelling it to pull out of the agreement in its entirety. Both companies are also riddled with massive debts owed banks, equipment suppliers and unsettled interconnect fees.
The void created by BT’s withdrawal could not have come at a worse time for Transcorp. The company’s IPO held between December and January this year is believed to have been undersubscribed by 70 per cent.
Even a two week extension granted by the Securities and Exchange Commission (SEC) to Transcorp which embarked on road shows to the UK and South Africa to shore up investors’ participation in the offer did not help matters.
Capital market operators are of the view Transcorp grossly underestimated the capacity of the market to absorb another major public offer right on the heels of the Dangote Sugar Refinery Plc IPO.
According to a market analyst, “the timing for Transcorp’s offer was obviously not right. It came at the end of the year when most investors were cashing in to raise money for the yuletide season. Besides, it came immediately after Dangote’s IPO which had soaked up most of the investible funds in the market.”
Transcorp, he posited, should have bid its time and waited to go to the market later this year when investors would have had a clearer picture on the company’s direction.
The undersubscribed offer is already impacting on Transcorp’s share price which has been on a downward spiral since the technical suspension on the company’s shares was lifted twice by the Nigerian Stock Exchange.
A few weeks after the IPO had closed the Stock Exchange lifted the suspension placed on Transcorp’s share which took a hit in four days of trading to fall from N9.71 kobo per share to N8.34 kobo per share.
Without prior notice to stock brokers, the Exchange placed another technical suspension on the shares, which was ostensibly done to stop the free fall. However, the official explanation given by the Exchange for the second suspension was that it had done so to enable the Issuing Houses to the offer conclude collation of returns.
Since trading resumed last week, Transcorp’s shares slumped again, closing in at N7.93 kobo a share by end of trading last Thursday.

http://www.thisdayonline.com/nview.php?id=75176

I am not susprised.

Even though TELECOM business is lucrative if things are not done with fairness to all. It will collapse.

wait, 3yrs from May 29; All OBJ fake reforms would be crumbling like pack of cards

With all the negative news and 75 million odd share waiting to be dumped as at Tuesday's trading day, only 947,316 shares exchanged hands leaving the stock to close at N7.54.

Miraculously (if such a thing exists in the stock market), the stock has closed at N9.71 after trading 3,011,808 shares. Today's low/high price was the same N9.71 how miraculous can this be for Transcorp Something does not add up. Dare I suggest insider trading? And all this in 69 trades only!

Let's see where all this is leading to

@Omoba

Happy or sad now or just confused

Anyway, this is what I know so far. The stock was mistakenly lifted off suspension, this
shouldn't be the case as the allotments from the IPO are yet to be made/approved by
both the board and the SEC. The two weeks automatic lifting of suspension applies to
POs not IPOs. Subsequently, the stock is back in suspension. I will live it up to all the
conspiracy theorists, Transcorp Haters (TH), and market experts to take it from there.

As for me, I am happy

@ Iyke-D - I hear you loud and clear, but come on, are you telling me you buy everything anyone has to sell (the crappy stories and explanations)?

No! I don't see you as such. I don't really care about whatever story those behind Transcorp have to tell. All that matters is for them to show good corporate governance. I care about people like you and I not being taken for a ride with out hard earned dough.

The Trancorp concept is brilliant. Its the foundation that is no good. No matter how good a structure that is built, if built on sand or anything that is not solid,
it is bound to fall sooner or later. I will buy into Transcorp when the moment is right.

But for now, my prayer is for people like you that trusted this institution, at this point in time to reap where you have sown bountifully and that means some how, some way Transcorp rises from the dunghill.

Hey Guys i beg i bought a couple of this shares at 7.50 is it time do dump this stock with all the negative stories making the rounds and the fact that it was undersubrcribed looks like i made a bad investment

Listen: Ladies and Gentlemen, if you want to be mega-rich, just buy some shares in TRANSCORP now before it is too late!!! who knows OBJ may assume it's chairmanship post handover.
By the way, the price of transcorp has been adjusted back to #9.71. GOODLUCK

@Omoba3

You are right I don't buy into every story that is out there, be it from the Dailies, SEC, NSE, or Transcorp itself!
Really, my initial reaction this morning was that the company had decided to mop up some of its stocks, hence
the price change and subsequent adjustment. Now the info I provided to you was what was sent to me by my
broker - I didn't get that from Transcorp directly. I see some holes in it, but I also see the reasoning behind it.

I also understand that there are people who are not only suspicious of Transcorp but who are also hell bent on
making sure it dies an early death - righfully or wrongfully.  How can you justify a paper like ThisDay publishing
info about a possible undersubscription without even contacting the company or SEC directly to either deny or
collaborate, what is their aim?  Like you said, I believed in the vision and I am still hopeful they can pull it off
despite the hiccups and initial mis-steps.  Some folks just like to get high off hearing some negative news about
Transcorp, but that is their cup of tea.  

I thank you for being mindful of little people like me who have invested in Transcorp. The truth is I am not even
considering the possibility of selling at all. I may be foolish, but something tells me Transcorp will weather these
storms and attain what I had in mind at the onset.  Politcally, the way its looking, Yar Adua chances of picking up
the reins from Obasanjo is brighter every day (opposition is too fragmented), meaning a possible favorable political
climate for Transcorp in the years ahead.

Only time will prove me wrong/foolish or right/wise for that matter, but all the same I am glad to have participated
in the process.  For the very self rigtheous investors, please take a minute to dig deep into the humble beginnings
of some of those foreign blue chip stocks you have in your portfolio - you may be very suprised about their pasts or
early beginnings, its not all that squeaky clean. . .

Cheers!