17 June 2017

Nigeria: Troubled Etisalat 'Considering Options'

Photo: Premium Times
An Etisalat Office

Hinting at its resolve to carry on without its majority shareholder, Mubadala Development Company Limited, Etisalat Nigeria management said on Friday its immediate focus was to reach a final resolution on the debt impasse with a consortium of banks next week.

On Thursday, PREMIUM TIMES reported exclusively that Mubadala, United Arab Emirates, UAE, firm had pulled out its investment in the telemobile firm and headed out of the country.

Mubadala, an Abu Dhabi Government-owned investment and development company, controls about 70 per cent of the equity holding in Etisalat Nigeria along with Etisalat UAE mobile.

Emerging Markets Telecommunications Services (EMTS), promoted by-one time Chairman, United Bank for Africa, UBA, Hakeem Bello-Osagie, controls the remaining 30 per cent.

Although Etisalat in its reaction through a statement by its Vice President, Regulatory & Corporate Affairs, Ibrahim Dikko, did not deny the report, it said it was premature to accept the exit of Hamadala as the conclusive option, as negotiations were still ongoing.

"Whilst it is premature at this stage of the ongoing discussions to affirm that this is the conclusive option, Etisalat Nigeria considers it pertinent to state that parties to the negotiation are considering a number of options and discussions are at an advanced stage regarding the syndicated loan agreement with the banks," Mr. Dikko said in the statement.

Mr. Dikko, who sounded optimistic about prospects of reaching a final resolution of the protracted loans repayment crisis with a consortium of banks, said it would be presumptuous and in bad faith to predict the outcome of the negotiations.

"We are considering a number of options and are not taking anything off the table at this time. Parties are keen to ensure that the ongoing discussions and eventual outcome do not affect the day to day operations of the business whether now or after the announcement of our agreement.

"All parties have continually demonstrated an interest in the continued operations of Etisalat as a business as it remains the backbone of millions of small business owners; multinationals, government and indeed Nigerian subscribers in general," Mr. Dikko said.

A consortium of banks, led by Access Bank PLC, has mounted pressure on Etisalat since 2016, to recover a $1.72 billion (about N541.8 billion) loan facility the company obtained in 2015.

The loan, which involved a foreign-backed guaranty bond, was for the mobile telephone operator to finance a major network rehabilitation and expansion of its operational base in Nigeria.

Unable to meet its debt servicing obligations agreed since 2016, the consortium, prodded by their foreign partners, threaten to take over the company and its assets across the country.

But, the intervention of the telecom sector regulator, Nigerian Communications Commission, NCC, and its financial sector counterpart, the Central Bank of Nigeria, CBN, succeeded in persuading the banks to rethink their threat and give Etisalat a chance to renegotiate the loan's repayment schedule.

Although the negotiations have been on with the banks since last March, those familiar with the crisis told PREMIUM TIMES, the decision by Mubadala to withdraw its investment followed certain findings about the activities of one of the directors it was not comfortable with.

A source close to the company, who requested that his name should not revealed, as he was authorised to speak in his official capacity on the issue, said while the loan was structured in Naira terms, the director had committed Etisalat to repay in dollars at a time the value of the Nigerian currency had plunged to its bottom.

Although the Abu Dhabi firm had agreed to be part of the negotiation to bail-out Etisalat, it was not clear why it decided to pull out of the deal and withdraw its investment from the Nigerian telecom operator, reputed to be the fourth largest, in terms of subscriber base.

NCC spokesperson, Tony Ojobo, said the telecoms sector regulator would not be able to make any official statement on the development till next week, as it was yet to receive any formal information on the exit of Mubadala from Etisalat.

"As you know, the issue is about operating licenses, which had terms and conditions attached. It involves two regulatory authorities, the NCC and CBN. Until all the parties involved have met and a decision taken, not statement will be issued. The statement will be based on the outcome of the meeting of all the parties involved," Mr. Ojobo said.

Access Bank's spokesperson, Abdul Imoyo, did not respond to calls from PREMIUM TIMES. He did not also send a reply to a text message on the issue.

Repeated telephone calls to Mubadala's Abu Dhabi headquarters were not responded to. A response was still being awaited on an email sent enquiry about the development on Friday.

Etisalat, which commenced business in Nigeria in 2009, acquired the unified access license, including a mobile license and spectrum in the GSM 1800 and 900 MHZ bands from the NCC in January 2007.

The company is rated by the NCC as Nigeria's fourth largest telecoms operator, with about 21 million subscribers or about 12.9 per cent of the telecom market share as at January 2017.

MTN takes the lead with 60 million, or 40 per cent market share; Globacom, 37million, or 24.6 per cent; and Airtel 34.6 million, or 22.8 per cent.

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