Nigeria's privatisation programme has run aground with the failure of the winning bidder of a $1.3bn telecoms contract to come up with the money.

Investors International (London), a consortium dominated by Nigerian banks and chiefs, failed to meet a Wednesday deadline for coming up with a balance of $1.185bn for a majority stake in state-run telecoms firm Nitel.

"At the expiration of the deadline, IIL had not shown up to pay," Nigeria's Bureau of Public Enterprises said,

Nitel will instead be floated to an "accelerated" timetable, the bureau said.

In the meantime, a "reputable foreign telecom firm" will be appointed to run Nitel.

Poorly connected

The collapse of the deal hands Nigeria's president, Olusegun Obasanjo, the problem of reviving Nigeria's privatisation programme, and finding new ways of supporting the development of the country's meagre telecoms network.

While Nigeria is Africa's most populous nation, with a population of more than 110 million, less than one in 250 people have telephone.

Mr Obasanjo is also left with political problems. Backers of IIL, which in November handed over a �130m non-refundable deposit, include senior Nigerian politicians.

Cash problems

ILL has been reported as saying that its efforts to raise the cash had been hindered by negative news from Nigeria, including the assassination in December of Justice Minister Bola Ige.

IIL in February missed the original deadline for handing over the balance of the cash.

But many observers believe IIL overpaid for the contract.

The runner-up in the bidding race, a consortium backed by Swedish and Korean firms, said last month, after IIL missed the first deadline, that it was no longer interested in the contract.