Divestiture as a strategic option for change in NITEL: lessons from the BT and AT&T experience

Abstract

PurposeAs NITEL, Nigeria's former national carrier, has been unable to cope with provision requirements needed by the country to support its development needs, this has led to changes in the attitude of the Nigerian government to competition within the industry. It is the contention of this paper that NITEL could learn from progress already made by its counterparts (such as BT and AT&T) in developed countries such as the UK and USA, especially in the area of regulation and divestiture.Design/methodology/approachIn order to examine these issues, this problem is addressed from two perspectives. In the first place, a comparison is carried out between the Nigerian telecommunications industry and progress already made in the UK and US telecommunications industry. In addition, although contextual differences do exist between the developed UK and US industry and the developing Nigerian market, such a comparison is seen as feasible based on previous research in this field. Arguably, it is suggested that divestiture amongst the numerous strategic initiatives is an option NITEL can explore.FindingsThe paper accepts that former monopolies BT and AT&T have developed divestiture theory and practice to address its failures. The question is whether these theories and practices might help NITEL address its challenges.Research limitations/implicationsIt is acknowledged that limitations within the paper might exist which may have impacted on the conclusion. In the first place, it could be argued that the existence of contextual differences between developed and developing telecommunications markets limits comparison between NITEL and BT/AT&T. Second, to an extent, it could be viewed as difficult to argue that divestiture successes in BT and AT&T could equate to similar successes in NITEL, especially considering the different economic realities NITEL has had to operate in. Third, it is also appreciated that it is difficult to effectively discuss the impact of a divestiture of NITEL without considering the significant changes in the use of telephony in Nigeria, i.e. the significant and increasing switch from fixed to mobile services.Originality/valueThe paper analyzes telecommunications companies in developing economies.