The Nigerian government's decision this week to liquidate Nitel, the country's incumbent telecom operator, has put the SAT-3 submarine cable as well as various exchanges, transmission stations and cabling networks up for grabs.

Nigeria is Africa's largest telecom market by investment and subscription. But the decision to liquidate, after numerous failed attempts to sell the company, could scare off international telecom investors from the market.

The total debt of Nitel and its subsidiary, M-tel, has steadily increased and now stands at 250 billion Nigerian Naira (approximately US$1.5 billion), including months of unpaid salaries.

The decision to liquidate Nitel and M-tel is said to have been taken after the management of the two companies failed to present a viable financial alternative to revive the companies and make them profitable.

Asked about the move, Bureau of Public Enterprise (BPE) spokesperson Chukwuma Nwokoh told Computerworld Zambia this week that, "The decision was arrived at after National Council on Privatization considered presentations made by Nitel and M-tel on the way forward for both companies at its meeting last December."

Like many countries in Africa, Nigeria wanted to privatize Nitel and M-tel in order to keep them in business, after failing to recapitalize their operations. Nitel used to be a monopoly but became marginalized a decade ago with the growth of privately owned and technologically strong GSM companies, including Africa's largest operator, MTN, and the region's second-largest operator, Airtel. The combined active subscribers for MTN and Airtel currently stands at 90 million, compared to Nitel's 500,000 customers.

Last year, Omen International Consortium failed to pay a $105 million bid security to the BPE. Omen was the second bidder to back out of a bid in less than four months. Another consortium, the New Generation Consortium -- led by China Unicom, China's second-largest carrier -- backed out after failing to pay the bid price of $2.5 billion for a 75 percent stake in Nitel. Investor International London's bid to acquire the company failed after it defaulted in paying a bid price of $1.3 billion.

In 2003, Pentascope of Netherlands was appointed as management contractor, charged with revamping the company for the privatization process. But complaints were raised that the bidding process itself was manipulated and that bribes were offered to BPE officials to manipulate the outcome.

Nigerian President Goodluck Jonathan was forced to set up a panel to probe the sale of Nitel and M-tel following the complaints. The findings of the panel were never made public. But Jonathan later suspended the head of BPE over the accusations.

The president of Senior Staff Association of Communication, Transport and Corporations, Elias Kazza, told reporters last week that, "the privatization of Nitel failed due to selfish interest of some Nigerians." He added, "the decision by the government to liquidate the company was no surprise."

The problems faced by the Nigerian government in privatizing Nitel underline the difficulties that several other African governments have had in privatizing incumbent telecom operators. Generally, corruption and lack of transparency among senior government officials have been at the root of the problems.