Our plan is to transform NITEL into a profit making entity – Iseghohi, GMD,Transcorp
By CHARLES NWAOGIJI
Monday, July 28, 2008
Group Managing Director/Chief Executive Officer (CEO) of Transcorp Plc, Mr. Tom Iseghohi, is a man who likes to talk straight. Even though he took over an organization that was bedeviled by crisis, he said that the task ahead of him, though daunting, is surmountable and he has set out to put things right. Iseghohi said Transcorp did not just get into NITEL because it felt so, but because “we want it to work and we do not want what happened to Nigerian Airways to happen to NITEL.”
According to him, “Nigeria has witnessed a very fast rate of expansion in the telecommunications sector . We are now eager to see such fast rate of growth more in the industry. Mobile phone services account for 99 percent telephone availability in Nigeria today.
We, therefore, want to encourage investment in the sector. We have a near term strategy, recovery strategy to ensure that the company continues to prosper, be stable and more valuable than it is today. We are ready to make NITEL work and reposition it as an efficient world-class telecommunications investor. We will put in financial control, which I have achieved.” He said the position of telecommunications in Nigeria is very bright despite the estimated 60 million subscribers that the market already has.
The Group Managing Director/Chief Executive Officer noted that Transcorp is a publicly quoted wholly-owned Nigerian business enterprise with interest not only in telecommunications, but also in agriculture, hospitality, shelter, infrastructure development, oil and gas, saying that this should put paid to insinuations that the conglomerate is owned by any single individual.
“The truth of the matter is that Transcorp is owned by 250,000 Nigerians. There is no individual that owns more than five percent of Transcorp. Because of our key position in the economy, international companies are willing to invest in Nigerian economy today”, he added
The CEO said that Transcorp took a giant stride in December 2005, when it paid $105million to the Bureau for Public Enterprises (BPE) for 51 percent equity in NIRMSCO properties, owners of Hilton Hotel. The hotel would subsequently be re-christened Transcorp Hilton which is one aspect of the company’s business. He equally pointed out that Transcorp made yet another big catch on November 14, 2006, when it signed a share sales and purchase agreement with BPE for the sale of NITEL with the sum of $500million.
“If the hotel is not so difficult to run, NITEL and its mobile subsidiary M-Tel will also not be difficult for us to run. We are ready to reposition NITEL as an efficient entity, ready, worthy and attractive for reputable world class telecommunications”, he said.
He noted that the reason people did not want Transcorp to come into NITEL was that it would put in discipline and every money that comes in would strictly be monitored. Iseghohi, who is our chief executive officer of the week also spoke on other issues.
My name is Tom Iseghohi, a native of Benin, Edo state. After completing my secondary education in Benin, I left for Bethune Cookman College in Britain in1985, where I obtained a degree in Accounting and computer science and an MBA in finance and international business from Ohio State University in 1989. I also completed the executive marketing programme at Duke University Graduate School in 1999 and the Kollogy (Northwestern) School of Management’s Executive Board Programme in 2005. I passed the CPA Chartered Accountancy Examination in 1993. I have two children, two boys and one of them is now a footballer. I am a very busy man and I spend most of my leisure time with my family and attend other social functions as much as I could.
Our vision in Transcorp is to create a globally competitive conglomerate which will supply world class products and services to local and global markets. Our mission is to serve the global markets with premier products and services from world class production facilities based in Nigeria and managed by Nigerians.
Transcorp is a company, in my view, that is positioned to transform the potentialities of Nigerians to economic reality. To make that happen, you need a lot of funding, you need also a lot of technical expertise and a lot of ability to take ideas and make them into project that could be a reality. To make all these things happen, you also need access domestically and internationally.
Access to technical expertise internationally, access to international money, access to the flow domestically and access to the regulator domestically as well as assess to domestic money. So, the best business is to look at the various sentiments within the Nigerian economy that have potentialities that have not yet been developed, such as agriculture, refinery, and tourism.
We believe that we can be a company that can be positioned to generate enough wealth, from 5 to 10 billion dollars as annual revenue within five to seven years and we can have market capitalization from 40 to 60 billion dollars within the next five to seven years. When we do that, we will create thousands of jobs in Nigeria. We will focus our money on community development capacity and development expansion of the Nigerian economy. We will also assist in clearing the image of the country internationally. We intend to set up international offices which will act as funding engines for the company and the country. That will help build credibility investment in a Nigeria company.
Why Transcorp got into NITEL
We did not just get into NITEL because we felt so. We decided to get into NITEL because we want it to work and we do not want what happened to Nigerian Airways to happen to NITEL.
The nation has witnessed a very fast rate of expansion in the telecommunications sector. We are now eager to see such fast rate of growth more in the industry. Mobile phone services account for 99 percent telephone availability in Nigeria today. We, therefore, want to encourage investment in the sector.
We have a near term strategy, recovery strategy to ensure that the company continues to prosper, be stable and more valuable than it is today. We are ready to make NITEL work and reposition it as an efficient world class telecommunications investor. We will put in financial control which I have achieved.
The position of telecommunications in Nigeria is very bright despite the estimated 60million subscribers that the market already has. This is affirmed both locally and on the international scene.
Transcorp investment in NITEL so far
It is on record that since we took over NITEL in November 2006, we have consistently supported NITEL management with funds to meet employee wage bills and other operational expenses without taking out any kobo from NITEL . Transcorp has provided funding to the tune of about N5 billion to NITEL and M-tel to fund employees and operational obligations (including payment of more than half a billion naira SAT -3 licence renewal fees in April 2007). This is a basic business imperative for us in Transcorp having invested an initial US $500 million to acquire 51 per cent of NITEL shares. The evidence and agreements between NITEL and Transcorp are there.
NITEL has nine STMIS that are working. Where is the money from nine STMIS? The reasons people don’t want Transcorp to come in is that we will put in discipline and we will know where money is going. Rather than evaporate, it will go into paying salaries, pay the employees and be put to more efficient use. Transcorp will put in financial control. Transcorp is owned by 250,000 Nigerians. There is no individual that owns more than five percent of Transcorp. International companies are willing to invest in NITEL, many state governments are willing to partner in other sectors with us. We have been approached in developing infrastructure, we have been approached in developing commodities and agriculture. So far, we have put in N5 billion into NITEL since inception.
Challenges in the telecommunications industry
I think telecommunications’ performance generally speaking is weak. Nigerians are paying too much money for poor quality telecommunications and we at Transcorp believe that one of the key factors to a good telecommunications industry has not yet been addressed. We need a strong home company with a strong financial base. We in Transcorp have the ability to transform NITEL. Unfortunately, the problem of the place has not allowed us to do much. But I believe, in no time, the problems we are encountering will be over.
Social responsibility to the people
I think, first and foremost, we owe the country economic development. What I mean by that is this, if you look at NITEL, for example, it is not a secret that NITEL is a company that has really worked for 30 years. We have acquired 51 percent of NITEL and we have managed it for about a year and half. We have received a lot of criticisms. People have to understand that the company that took 30 years to destroy, it will take more than one year to repair.
We owe the country the responsibility to make NITEL work. So, that is one of the first things we came to do. We also owe the country a responsibility to help in the development of the younger people. For example, we sponsor events which are organized to focus on capacity building and leadership development for Nigerians, highly talented Nigerians under the age of 30. We have jumped in and we are sponsoring the event and we are the lead sponsor of the event because we believe that the only way we can develop as a country is to develop our people and to give back to the society .
In addition to that, we will also be involved in initiative to develop the younger ones to be more business like. If our company is found in a particular area of the country, it is our responsibility to develop that community. But If you even look at the company itself, you notice that because we are a private company, we are not mandated by any political reason to any body. But if you look at our company, you will see national character, well represented within the country. We try to pick our leadership from all parts of the country, from different geo-political zones. We also pick capable people, who we can look up to and they can say, these are people who we are proud of from my community. So, we believe very strongly in supporting people who are doing well as well as helping to develop people who are not doing so well.
Success made by the company since establishment
I think that the company is a star considering the fact that it has achieved a lot since it came into being. We actually started acquiring assets in late 2005. We have to go through fund raising process. So, the company, first of all, did a specific job of raising appropriate fund which was very successful, attracting foreign investors to participate in this economy. One of the key challenges of this economy has always been how do we bring Nigerians from aboard back home with the right skill to collaborate with local Nigerians, so that there can be technology transfer, skill transfer, the people who are coming from outside learn from them the locals and the locals learn from them.
We have been bringing very successful Nigerians from outside the country to come in. We have also been very successful in bringing the local Nigerians who are successful and talented to join us in focusing on improving the economy. In addition to that, I think most of the issues at NITEL have been marked out. We have been successful in getting both the government officials and Transcorp executives on what is happening to NITEL and I think very soon, you will begin to see the fruit. We have also been very successful in engaging various government officials in new areas of economic development which again you will begin to see the dividend.
Once again, we are very focused on housing development within the country. We believe that housing and food crisis will soon be a thing of the past, considering our efforts in this recent time in trying to invest in that major area of the economy. These two areas are where we have decided to play key roles.
Other areas of Transcorp investment
To achieve sustainable development in the agricultural sector, a public-private partnership (PPP) platform will be used to drive all the components. This, we believe in Transcorp, will increase productivity, efficiency and quality in our agricultural produce. I am convinced that the sector will achieve unprecedented growth and development in the future. We must venture into agriculture instead of bringing foreigners to develop the sector for us. The country is blessed by God with rich human and natural resources. So, hands must be on deck to enable us move the country forward and as well as to save it from being hit by lack of food. In Transcorp, we believe this is the only way to move the nation forward in food sufficiency.
When the Federal Government asks the people to go into massive cassava plantation, a lot of people went into cassava planting but what they did not think of, is after the cassava are harvested, who is going to buy them. So, what has happened was that there was a huge supply of cassava but not enough demand that could create huge opportunities. The thing you should also keep in mind is that Nigeria consumes 250million litters of ethanol every month. This is the statistics that was just given to me last week by Ministry of Commerce and Industry. How much of that ethanol do you think Nigeria produces?
Not one drop. It is all imported into this country. As a result, Transcorp wants to solve that problem for Nigeria by creating large ethanol plants to produce ethanol from cassava. So, we’ll create farming jobs, we’ll create manufacturing jobs, we’ll increase jobs, and we’ll help the economy to grow because the ethanol we produce can be domestically utilized as well as exported. In fact, every drop of ethanol we produce will be sold even before we produce it. So, those are the type of things that Transcorp is focused on doing. Importantly enough, people think of Transcorp as just NITEL.
Whereas at the end of the day, NITEL is just going to be a small piece of what we do. Another important area of our focus is infrastructure. As you know, we are already holding one hotel which we consider to be commerce resting place. We are in the process right now of expanding from Abuja to Lagos, Port Harcourt, Jos and Kano. Also, we are planning to build hotels across the continent.
So, not only are we helping the economy expand domestically, but also we are helping the economy expand internationally.
Another thing which Transcorp is doing is to bring Nigeria to the corridor of global economy. We believe that Nigeria should take a bigger share of the global economy. For example, as a country, most of our oil is sold as crude. That is the lowest level, lowest profit is at the crude level. What a company like Transcorp can do is that we can take some of that crude oil, instead of selling it at crude level, we can partner with foreign refiners that sell down stream in their own countries.
We take the crude oil, use it to partner with them and that crude oil would now have value worth four or five times of what it would have been if we sold it at crude level. This will enable us to earn foreign income for the country, create more jobs and allow for capacity building etc. Transcorp is also very much focused on developing the biggest asset we have as a country which is human capacity. We are very focused on investing in human capacity because at the end of the day, we as an English speaking country with one hundred and forty million people, we can get into all kind of international services,
Strategic plans for the company ?
Our strategic plan for the future is to restructure into various divisions that will take care of various businesses. We have technology and telecommunications division, energy and gas, commodity and agriculture, real estate and international division. We intend to develop the divisions to be a profit -oriented company, so that the shareholders can smile home with profit. Government must begin to address the decayed national infrastructure which is a major factor that is responsible for low capacity utilization in industries and sluggish growth in the economy.
The real sector of the economy must be encouraged at all levels of government to alleviate the sufferings of people. Government should, as matter of urgency, tackle from within the issue of power and energy generation which has the capacity of creating jobs and economic empowerment. The epileptic power supply has continued over the years with no significant improvement. This has resulted in decline in industrial capacity and enormous resources being committed to stand by power generation. The deplorable state of infrastructure has led to some hardship experienced by business operators in the country which Transcorp, being a private sector company, has come to contribute its quota to national economic development in the country.
I think that Nigerians are not patient enough and I also think that the Yar-Adua government has done well in some areas, which I must confess, I am very proud of. If we look at our country, we are not known to be a country that respects the rule of law and if we expect investors to bring money to develop our economy, we have to get serious about due process and rule of law. I’m very proud of the fact that this is a government that focuses on that and not only government in term of words that they speak, they have also demonstrated through their actions that they are committed to due process.
If you look for example, what happened when we had the NITEL crisis, the government stood up and reversed itself to ensure that due process and rule of law were followed. I think we should also be proud of a government that can do that and also I think, in my own view, that that is a signal that we are real. That we are beginning to change. So, I think that people have to be a little more patient with the government.