Sitting in traffic at Iwo Road roundabout in Ibadan, the electronic billboard flashes adverts from Etisalat, Nigeria’s fourth largest operator but for how much longer? – Paul Adepoju.
Having commenced operations in 2008, Etisalat is Nigeria’s youngest GSM service provider and boasts over 21 million subscribers. The company’s largest shareholder, Mubadala Development Company of United Arab Emirates, has pulled out unable to reach a deal with Nigerian banks.
The mobile operator had taken loans of $1.2 billion for network upgrade and expansion with the money sourced in both dollar and naira denominations. The company commenced payment of the loan based on the scheduled arrangement, however later wrote to the creditors, informing them that it would not be able to continue payment for some time owing to high cost of foreign exchange.
At the time Etisalat’s VP, Ibrahim Dikko shared “We are in discussions with our bankers and have been for quite a while. They have not taken over the business and we are hoping that we can resolve the issue and find a way to renegotiate term.” Trouble started when it sent a notice to the lenders that it would miss a payment schedule in February, which triggered a debt discussion.
Was it an exit move?
Some reports suggest that this was actually an exit move by Etisalat and now the lenders want the government, through the Economic and Financial Crimes Commission (EFCC), to wade into the matter, by investigating what the company did with the loan.
A bank source revealed that they presented Etisalat with several viable options to restructure but all that the company wanted was for the banks to write off the loan which the banks didn’t find as welcoming, “all we want is to recover the loans; we cannot write off the loans as being demanded by Etisalat, because the company is viable,” a source revealed.
Sources in Etisalat disputed claims by the banks saying “the actual outstanding on the Etisalat loan is about $500 million (N165 billion). This is in view of the fact that Etisalat has efficiently serviced the $1.2 billion loan up until early this year when discussions with the banks regarding the repayment restructuring commenced.”
CBN and NCC align against a hostile bank takeover
CBN officials met in Abuja with the CEO’s of the 13 banks on Wednesday. Citing the Nigerian Communications Act (NCA), the Nigerian Communications Commission (NCC) on Tuesday had stepped into the crisis reminding the banks that they could not take over Etisalat’s operating licence without its approval.
Aligning with the NCC, the Board of the CBN said they would not support any “hostile takeover” of the telecoms company as it clearly jeorpardises the federal government’s effort to attract Foreign Direct Investments (FDI) into Nigeria’s ailing economy.
The CBN, NCC and the banks would resolve the matter amicably. “Just like the NCC has warned that Etisalat’s licence is not transferable, the leadership of the CBN from all indications will not allow any hostile takeover without its approval reported ThisDay.
“They (the banks) cannot do that by just taking a decision like that. Etisalat is not transferring any licence to any consortium of banks. We are going to resolve it amicably. The CBN and NCC are working towards resolving it amicably,” the CBN source said.
Business as usual – for now
In a message to all staff of the company, the Chief Executive of Etisalat Nigeria, Mathew Willsher, acknowledged the challenging business outlook and added that Etisalat’s immediate priority was to ensure there were no disruptions to its daily business operations.
“In spite of the changes that lie ahead, we aim to maintain continuity through our focus, capabilities and values,” he said. “We will continue to focus on the customer. Our commitment to delivering results through innovation, operational excellence and quality of service will endure.”