Nigeria’s fourth largest telecommunications company, Etisalat Nigeria, is at the verge of being taken over by a consortium of banks, after it defaulted payments for a $1.2 billion loan (about N541 billion) it took four years ago to expand its network.
The telecommunications firm however said it is seeking renegotiation with its creditors over the loan.
The nation’s fourth mobile network provider held talks in Abuja with top officials of Guarranty Trust Bank (GTB), Zenith Bank and Access Bank to renegotiate the $1.2 billion loan which was used to expand its network across the country.
The Vice President for regulatory affairs at Etisalat Nigeria, Ibrahim Dikko, who acknowledged that the telecommunication company was having difficulty servicing its debt denied a take-over of the company.
According to him, Etisalat is in talks with the banks and is looking at several options, including converting the dollar denominated loan to naira.
He explained that the economic downturn as well as currency devaluation and dollar shortage in the country’s interbank market were among factors that led to the company missing its payments.
“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 terms”, Dikko told Reuters yesterday, adding that the company was now looking at “all the options” which could include converting the loan into naira, but does not want to anticipate the outcome of talks with the banks.
He noted that the business performed well last year and was still in profit at the level of earnings before interest, tax, depreciation and amortisation, while loan repayments had been up to date “until recently”.
In a chat with LEADERSHIP, Dikko further said, “We are negotiating our loan. It has been ongoing for quite some while. But as I speak to you, no person has taken over Etisalat’s operations. As a management, we are just committed at keeping the business running and servicing our customers. We hope to conclude discussions with the banks.
“Yes, Etisalat owes the banks; it is a syndicated loan. If you will recall, in 2013, it was announced all over the papers that we took a syndicated loan facility. We are in discussion to renegotiate the terms. The current outstanding on the syndicated loan is around $500 million. This is because we have been repaying since then, not that we just took the loan and never paid. I can’t really say the percentage that has been paid. We are in discussion now.”
Meanwhile, contrary to earlier reports in online media (Not LEADERSHIP.ng) that Nigerian Communications Commission (NCC), the nation’s telecommunications regulator, had given the banks the go-head to take-over Nigeria’s fourth largest mobile operator by subscriber base, the commission said it was watching developments.
When contacted by LEADERSHIP yesterday, Director, Public Affairs of NCC, Mr. Tony Ojobo denied the report, saying the commission never approved such and that it cannot be influenced by what is trending on websites.
Noting that NCC has not endorsed the take-over of the mobile network operator by the three banks, Ojobo said “What the commission has done is to request for an official position from Etisalat Nigeria. From there, the Commission will look at the matter critically and make a formal pronouncement. Whatever decision that would be taken will be in the interest of the nation,” he said.
We Have No Hand In Etisalat’s Deal- AMCON
Meanwhile, contrary to reports that Assets Management Company of Nigeria (AMCON) had prevailed on the concerned banks to take over the company to cut down on the level of their bad loans, AMCON has said it has no hand in the Etisalat deal.
AMCON which had bought over bad debts of the Nigerian banking industry is currently working on resolving the bad debts and is no more buying any bad debt, as its life span is to end in a few years’ time.
An official of AMCON told LEADERSHIP that the bad bank does not have the power to prevail on any bank on the level of its bad debt because that responsibility lies with the Central Bank of Nigeria.
Spokespersons for two of the three banks could not be reached for comments, while the other one said he was not aware of the takeover.
Etisalat Nigeria, which has 40 per cent of its shares held by Emirates Telecommunications Group (Etisalat), signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650 million loan and fund a modernisation of its network.
Several other firms took out dollar loans in 2013 to expand at a time Nigeria was seen as an attractive investment prospect, with an economy which was growing at seven per cent with and oil prices rising rapidly.
However, the country has been running short of dollars, as oil revenues have fallen along with the price of crude, pushing the economy into its first recession in a quarter of a century.
This has weakened the naira which trades at a lower level on the black market than the official interbank rate versus the dollar.
The dollar shortages have made it difficult for local companies to get access to foreign currency and as a result, some have struggled to repay dollar-denominated debts, with several lenders having restructured loans to oil firms. Last month, Arik Air was placed in receivership by AMCON for unpaid debts of around N147 billion.
According to the NCC, Etisalat is Nigeria’s fourth largest telecoms operator, with about 21 million subscribers as at January 2017. It commenced business in Nigeria in 2009.
In a related development, the Nigerian Communications Commission (NCC) says it is dedicating the year 2017 to ensuring all networks within its regulation — MTN, Glo, Airtel, Etisalat and others — treat consumers right.
The NCC said all is now set for the flag off campaign of the Nigerian Telecom Consumer in line with this objective,.
The campaign is billed for Wednesday, March 15, 2017 which coincides with the 2017 World Consumer Rights Day (WCRD) with the theme “Building a Digital World Consumers can trust”.
The high point of the event which holds at the NCC Headquarters in Abuja would be the unveiling of the face of the Nigerian Telecom Consumer.
“Two high profile artistes have been named to showcase the face of the consumer,” NCC said in a statement by its spokesperson Tony Ojobo.
Executive cice chairman of NCC, Umar Danbatta, had earlier said in Abuja that consumer protection and empowerment is one of the eight pillars of the 8-point agenda of his administration and so “the Commission is dedicating the year 2017 to the welfare of telecom consumers.”
Key components of the year of the telecom consumer include: Creation of greater awareness on Quality of Service (QoS); Electromagnetic Fields (EMF); Do Not Disturb (DND) which consumers can use to stop unsolicited text messages and the NCC’s toll free line – 622 through which consumers can reach the commission in cases where service providers fail to resolve their complaints.
The campaign hopes to secure the support of network operators towards meeting set targets and Key Performance Indicators (KPI) on Quality of Services especially as it affects drop calls.
Only recently, the Commission read the riot act to operators on poor quality of service, especially drop calls and poor network services in general.
The year of Nigerian Telecom Consumer campaign will also witness a new programme tagged “NCC Consumer conservation” which the Commission plans for different locations across the six geopolitical zones.