A Dutch telecoms group, formerly part of KPN, has become the preferred bidder to manage the troubled Nigerian state-run telecoms company Nitel.

The Nigerian privatisation agency Bureau for Public Enterprises (BPE) spokesman Joe Anichebe said that Pentascope International had beaten two other short-listed bidders.

We believe it is relatively stable otherwise we wouldn't go in Josbert Kester Pentascope

"The challenge is first of all is getting the network capacity, both lines and quality, and then you can get the customers in," Pentascope's finance director Josbert Kester told BBC News Online.

Nitel is the monopoly fixed-line telecoms provider in Nigeria but has slipped to third position in the mobile market and has a poor customer relations reputation.

"Tackling corruption is another element but you are also looking at debt collection and knowing your financial position, the revenues and costs, so decision making can be made on the right information," Mr Kester said.

Mr Anichebe said the final contract was still subject to "negotiations in respect of the fees and other management contract documentation".

"It's ambitious but we expect to sign the contract by the end of the month," said Mr Kester.

Trouble areas

The company plans to take up the contract despite ongoing political instability in Nigeria.

"We have concerns - around presidential elections there is always a period of uncertainty, but we believe it is relatively stable otherwise we wouldn't go in," said Mr Kester.

Attacks on infrastructure could also make Pentascope's management of Nitel difficult.

"We know for instance that the fibre optic sea cable is cut a lot and then you have to fall back on satellite, which is lesser quality and more expensive," he said.

"It is an issue but it won't be part of negotiations."

Mr Kester also hinted there could be jobs cuts.

"We believe that business will grow in Nigeria, but the growth will be in different areas, and that means people will have to learn new skills," he said.

"You will always have some people who can't but we believe it can be dealt with by training and natural attrition."

Contract options

Pentascope is the former international consulting arm of KPN and has worked in South Africa, Sudan, Namibia and Egypt.

It also worked for KPN in restructuring the Czech state-owned telecoms operator Cesky Telecom in preparation for privatisation.

The government decided to offer a management contract for Nitel after it failed to privatise the company last year.

Preferred bidder Investors International London Limited failed to raise the money required.

Mr Anichebe said if no contract was agreed with Pentascope, the two other groups, BSNL-TCIL consortium and Africa consortium, would be reconsidered.