VZCZCXRO3836
PP RUEHMA RUEHPA
DE RUEHUJA #1428/01 1601437
ZNR UUUUU ZZH
P 091437Z JUN 06
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 5994
INFO RUEHOS/AMCONSUL LAGOS 4283
RUEHZK/ECOWAS COLLECTIVE
RUEHC/DEPT OF LABOR WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 001428 
 
SIPDIS 
 
SIPDIS 
 
USDOC FOR 3317/ITA/OA/KBURRESS 
USDOC FOR 3130/USFC/OIO/ANESA/DHARRIS 
DOL FOR ANN ZOLLNER 
TREASURY FOR DAN PETERS 
STATE PASS USTR 
 
E.O. 12958: N/A 
TAGS: ECPS ELAB ECON ETRD EINV PGOV NI
SUBJECT: TELECOMMUNICATIONS STRIKE IMPACT 
 
REF:  ABUJA 1355 
 
¶1. Summary.  The strike at state-owned NITEL continued on 
June 9 to have significant effects on communications and 
business in Nigeria.  The workers went on strike June 4 over 
salaries overdue since February.  A union official said the 
strike would continue until all outstanding wages, totaling 
4 billion naira, were paid.  On June 5, the GON "released" 
1.7 billion naira, but the strikers said they had not 
received any of this money.  The press reported June 8 that 
the strike affected the hotel sector badly and "paralyzed" 
Nigeria's electronic banking system.  Internet access now is 
almost impossible, while many local and international calls 
are blocked.  Losses nationally from the strike are in the 
billions of naira.  If the strike becomes total and lasts 
much longer, most forms of electronic communication in 
Nigeria, including by telephone and the Internet, could be 
shut down totally.  All NITEL lines in Lagos and Abuja 
already have been switched off completely.  End summary. 
 
¶2. The current national strike by employees at state-owned 
Nigerian Telecommunications (NITEL) continued on June 9 to 
have significant effects on communications and business in 
Nigeria.  The workers, who are members of the National Union 
of Posts and National Telecommunications Employees (NUPTE), 
went on strike June 4 over salaries overdue since February 
and, according to NUPTE, the late payment of housing 
allowances for the past year.  NITEL has more than 10,500 
government workers.  A union official said the strike would 
continue until all outstanding wages, totaling 4 billion 
naira (about $31 million), were paid. 
 
¶3. NITEL is owed about 80 billion naira ($625 million) in 
unpaid bills, of which Government of Nigeria (GON) agencies 
account for roughly 5 billion naira ($39 million), Reuters 
reported.  On June 5, the GON "released" 1.7 billion naira 
(about $13.28 million) as part of the debts owed to NITEL by 
government ministries and parastatals, but the strikers said 
they had not received any of this money. 
 
Strike's Effects Are Wide-Ranging 
--------------------------------- 
 
¶4. The press reported June 8 that the strike affected the 
hotel sector badly and "paralyzed" Nigeria's electronic 
banking system, particularly the United Bank for Africa. 
Major companies affected included the Nigerian National 
Petroleum Corporation, the Petroleum Product Marketing 
Company, and the Shell Nigeria Exploration and Production 
Co.  Subscribers of fixed-wireless networks such as 
Multilinks, Reltel, and Global System for Mobile 
Communications (GSM) networks such as MTN Nigeria could not 
complete calls.  The strike prevented most people from 
sending text messages to international mobile phones and 
precluding roaming services for mobile lines of Nigerian 
origin.  Because of poor communications, the interbank rate 
rose sharply, and the overnight rate went from 1 percent to 
5 percent, according to a dealer at Citibank.  Internet 
access now is almost impossible, while many local and 
international calls are blocked.  Losses nationally from the 
strike reportedly are in the billions of naira.  (Note: See 
impact on U.S. Mission communications in reftel.) 
 
Severe Consequences If Strike Continues 
--------------------------------------- 
 
¶5. NITEL currently is providing skeletal services and is 
making a small part of its infrastructure available for use, 
but if the strike becomes total and lasts much longer, most 
forms of electronic communication in Nigeria, including by 
telephone and the Internet, could be shut down totally, a 
telecoms contact of the embassy explained June 8.  NITEL 
earns more by offering its infrastructure to other telecom 
operators than it does from providing its own landline and 
mobile-phone telephone services -- thus increasing the 
strike's impact.  Though NITEL controls only a small 
percentage of Nigeria's activated mobile-phone lines, it 
controls a large percentage of activated fixed lines and 
almost all the country's switching services, as well as the 
international gateway, an undersea cable called SAT-3. 
Private telecom operators across Nigeria depend on NITEL's 
infrastructure for their operations, particularly to connect 
with each other. 
 
 
ABUJA 00001428  002 OF 002 
 
 
¶6. Cellular-phone sites built by GSM companies must be 
connected to NITEL's fiber-optic cable for interconnection 
to be possible.  Most of Nigeria's Internet service 
providers depend on NITEL's infrastructure for Internet 
service.  NITEL is one of Nigeria's two national telecom 
operators.  Globalcom is Nigeria's other one and offers some 
of the services that NITEL provides -- but at far higher 
prices than does NITEL.  Globalcom's credit policy is very 
strict.  Unlike NITEL, Globalcom switches off service to 
customers that owe it money.  Most telecom companies in 
Nigeria depend on NITEL to route their international calls 
and data traffic via SAT-3.  Most Nigerian telecom 
operators, including GSM companies, are connected to each 
other via NITEL switches. 
 
¶7. All NITEL lines in Lagos and Abuja already have been 
switched off completely.  Without a quick resolution of the 
strike, this could result in the closure of four 
international gateways, all of which are hooked to the SAT-3 
cable linking Nigeria to Africa and other parts of the 
world. 
 
What effect on NITEL's attempted privatization? 
--------------------------------------------- -- 
 
¶8. The GON has sought to privatize NITEL for years, and the 
Bureau of Public Enterprises (BPE) terms its attempted sale 
of NITEL a "flagship transaction."  In a May 24 press 
release, the BPE said Nigeria must sell NITEL "sooner rather 
than later" because the company's value was declining as its 
financial condition continued to erode.  (Comment:  While 
Nigeria's efforts to privatize NITEL almost certainly will 
continue, this strike, and the economic fallout to NITEL, 
will further delay the parastatal's sale.  End comment.) 
ANYASO