Thursday, 09 March 2017


The Nigerian Communication Commission, NCC is still battling in an effort to broker a peaceful resolution between Etisalat Nigeria and a consortium of banks that gave credit facilities to the troubled Nigerian based UAE telco brand.

Guaranty Trust Bank, Access Bank, and Zenith Bank, have been having a running battle with the mobile telephone operator over a loan facility totaling $1.72 billion (about N541.8 billion) obtained in 2015.

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

However, following the failure of the company to meet its debt servicing schedule agreed since 2016, the three Nigerian banks, prodded by their foreign partners, reported Etisalat to banking sector regulator, the Central Bank of Nigeria, CBN, and its communications sector counterpart, the NCC as reported by sources earlier this week.

Although Etisalat blamed its inability to fulfill its obligation to the banks on the current economic recession in Nigeria, the banks said their attempt to recover the loan, by all means, was fuelled by the pressure from the Asset Management Company of Nigeria, AMCON, demanding immediate cut down on the rate of their non-performing loans.

A senior official of one of the banks who spoke with PREMIUM TIMES late on Tuesday said one of the options they have proposed to Etisalat management as a middle way out of the crisis was for it to request for a bankruptcy status.

The official, who requested that his name should not be revealed since he was not authorized to speak on behalf of the consortium, said the bankruptcy option would require having receivership management appointed by the banks to oversee its operations.

But, the NCC appears not to be favorably disposed to the takeover proposal, the source said, as it believes Etisalat was not only a viable going concern but also willing and able to negotiate its loan servicing.

However, a top source at the NCC revealed late Tuesday that the commission may have approved the takeover, which is expected to occur soon.

However the telcos giant won’t let this go down without a fight for its Brabd share. Etisalat is locked in discussions with its creditors over the $1billion loan which was advanced about two years ago.

The banks are still threatening to invoke a segment of the loan agreement, which allows the creditors to assume the management of the company as reported by The Nation newspaper on Tuesday.

Following the report and the unfolding events, a segment of the media reported, albeit falsely, that the telco had been taken over by the banks. However, Etisalat, the sector’s regulator, the Nigerian Communications Commission (NCC) and  the Association of Telecoms Companies of Nigeria (ATCON), the  umbrella body of all the practitioners in the information communications technology (ICT) industry, said there was no truth in the news that Etisalat had been acquired by the banks.

A source at Access Bank told The Nation that there was nothing to suggest that the bank had taken any steps to acquire Etisalat. There were no comments from Zenith Bank and Guaranty Trust Bank (GTB). An expected feedback from GTB to an email request on the issue had not come as at the time of filing this report.

However, NCC   said it had requested Etisalat to  furnish it with details of the issues, assuring that there was no cause for alarm. Its Director of Public Affairs, Tony Ojobo, said the regulator will advice based on the facts made available to it by Etisalat.

He said the insinuation that the Commission had given its blessing for the alleged takeover of Etisalat was far from the truth.

Ojobo said:  “We have requested Etisalat to write a formal letter to the Commission detailing what transpired. It is based on this that the Commission will take whatever decision that would be deemed necessary. But let me assure you that there is no cause for alarm. All the issues will be resolved amicably for the good of the telecoms industry and the country.”

ATCON urged the Federal Government to save the telecoms industry from collapse by easing access to foreign exchange to carriers.

ATCON’s President Olushola Teniola said the report that Etisalat had been taken over by lenders was incorrect.  He said the telco failed to meet its repayment obligation because of the current economic downturn said Teniola:

“The situation is that Etisalat owes some interest rate payments which have not been met, so, that means that they have basically not met their obligations. They are currently negotiating with the said banks to come to a conclusive resolution.

“The reason why this has happened is that at the time Etisalat took this facility two years ago, the naira was very favourable to the dollar and the size of this loan is quite huge, it is above  $1billion.

“So, the problem that has happened since they took the facility to expand the network, the dollar exchange rate to naira has gone in the opposite direction. At the point when they took it, naira was 160/dollar.  Now the dollar is 450 at the black market. So, you can see that it doesn’t matter what amount of planning you do, it’s going to be very difficult to continue to sustain the payment on the initial loan that was taken, and because of this, it is causing Etisalat some difficulties to meet its obligations. I am sure that the management is doing everything possible to bring about an amicable settlement with the lenders.

Teniola urged the Federal Government “to step in now to ensure that any telecoms equipment; any telecoms development; be it for broadband, be it for quality of service, be it for the capacity upgrade of the network, that the sourcing of infrastructure to achieve this should be done at a reasonable dollar to naira rate, so as to be able to sustain the industry. Otherwise, we will have what we call a ripple effect in this market, and we should not allow that to happen. The example that Etisalat is demonstrating to us that it is coming to a head, and I am confident that the management of Etisalat will resolve the problem”.

A spokesperson of the telco, Seyi Osuntedo, said talks were going on with the banks, adding that the management of the telco was intact.

Part of the options being explored by the parties, it was gathered, is for Etisalat to inject equity since the telco missed its payment schedule for February. The banks have asked the Abu Dhabi-listed telecom group to inject fresh equity into Etisalat Nigeria after the affiliate missed a payment on its $1.2 billion loan, a senior banking source told Reuters.

The banking source with knowledge of the matter said Etisalat Nigeria had given notice to lenders that it would miss a February payment which triggered a debt discussion, adding that they were yet to agree on terms.

The source said lenders had asked Etisalat Nigeria to convert shareholder loans in its books into equity and inject fresh capital to free up its cash flow, in addition to asking that its parent firm should increase its 40 per cent stake in the affiliate.

It was learnt that since the story broke, the directors and management of Etisalat have intensified efforts, including reaching out to the sector’s regulator, the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) to prevail on the creditor banks to afford them more time to resolve the financial imbroglio, a plea that a source at NCC said, was yet to be considered by the banks.

“The banks appear not to be favourably disposed to the company on this score at the moment,” the source said,

An NCC  official said it was keen on preserving the status quo by keeping Etisalat in the business so as to provide subscribers with enough choice. It will serve no one any good to allow any of the GSM providers to be eased out of operation, he said. The official confirmed that senior officials of NCC accompanied the management of Etisalat to the meeting the telco had with the Central Bank of Nigeria (CBN) in a bid to resolve the crisis.

While efforts to bring succour the way of Etisalat are ongoing, one of the leading GSM providers is already lurking in the wind to acquire the troubled entity. The competitor, The Nation learnt, is scheming to buy off Etisalat and add its about 21million subscribers to its existing customer base, making it the dominant player in the sector, should the deal sail through.

Etisalat is Nigeria’s fourth largest telecoms operator, with about 21 million subscribers as at January 2017, according to the NCC. It commenced business in Nigeria in 2009.

Compiled and edited by: Jimmy Adesanya.

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