UPDATE 2-Nigeria retakes control of Nitel, seeks investors

* Nigeria revokes sale of Nitel to Transcorp

* Gov't creates technical board to manage telecoms firm

* New investors difficult to find for Nitel

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By Camillus Eboh

ABUJA, June 1 (Reuters) - Nigeria's government on Monday took back control of the country's former telecoms monopoly, Nitel, citing a lack of investment and unpaid debts in the three years since local company Transcorp took over the firm.

The National Council of Privatization said Transcorp Plc TCNP.LG -- which has been hit hard by a decline in both fixed and mobile subscriber numbers -- had breached its contract, and the government would control Nitel until a new core investor was found.

"The government is considering a technical board to manage NITEL until a new core investor emerges," said Christopher Anyanwu, director general of the Bureau of Public Enterprises.

Transcorp bought 51 percent of Nitel for $500 million in August 2006, but Nitel has deteriorated so badly that Transcorp has been unable to raise the cash to turn it around.

The government said Transcorp failed to meet its obligations to invest 8.9 billion naira ($60.7 million) within 100 days of the takeover and had an unpaid debt totalling 17 billion naira.

New investors have been difficult to find for Nitel, which is heavily indebted and whose fixed lines have declined to less than 100,000 from five times that figure in 2001.

MTEL subscribers have also fallen to a few thousand from 1.3 million amid fierce competition since Transcorp took over.

Nitel's infrastructure has fallen into disrepair during decades of corrupt and inefficient state management. Many of its lines malfunction, its billing is erratic and staff go for months without being paid.

The government in Africa's most populous nation started trying to sell the firm in 2001 and went through a series of near misses before finally selling to Transcorp.

Nigeria had come close to selling Nitel in late 2005 to Egypt's Orascom Telecom (ORTE.CA), which had experience in countries with infrastructure problems, but the government rejected the firm's $256.5 million offer as too low. (For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com/ ) ($1=146.70 naira) (Additional reporting by Felix Onuah; Writing by Randy Fabi; Editing by David Cowell and Simon Jessop)