$1.2b Etisalat Debt: Tension Mounts As NCC Starts Fresh Mediation …Uneasy Calm at Etisalat, Public Outcry

Etisalat Group Chief Financial Officer, Serkan Okandan
With the media awash with news of the purported takeover of telecommunications company, Etisalat, following the expiration of the deadline for repayment of the $1.2 billion (N541 billion) loan from a consortium of banks, the nation’s regulatory body, the Nigerian Communications Commission (NCC) has gone into fresh intervention between the Telecom firm and the banks through the Central Bank of Nigeria (CBN).
The renewed meeting came on the wake of the filing by Etisalat Group to the Abu Dhabi Securities Exchange in Abu Dhabi, United Arab Emirate declaring opening of a process to hand over 100 percent of the shareholding of Etisalat (EMTS) Nigeria to a syndicate of Nigerian banks, EMTS Lenders.
The filing, with reference number Ho/GCFO/152/85, and dated June 20, 2017 signed by Etisalat Group Chief Financial Officer, Serkan Okandan, said efforts by EMTS to restructure the repayment of the syndicated loan by a consortium of banks to Etisalat Nigeria collapsed, necessitating the handover.
“Further to our announcement dated February 12, 2017, Emirates Telecommunications Group Company PJSC, ‘Etisalat Group’ would like to inform you that Emerging Markets Telecommunications Services Limited ‘EMTS’ established in Nigeria and an associate of Etisalat Group with effective ownership of 45 per cent and 25 per cent ordinary and preference shares respectively, defaulted on a facility agreement with a syndicate of Nigerian banks (EMTS Lenders).
The Group of banks is said to be made up of Access Bank Plc, Zenith Bank, Guarantee Trust Bank (GTBank), First Bank, UBA, Fidelity Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.
While stakeholders are expressing regrets over the incident, noting that the move will send wrong signals to investors in telecommunication business and further plunge the industry into funding crisis, the nation’s regulatory body, the NCC and Etisalat Nigeria management have assured subscribers that the telecom firm will not go under, but will continue to place its subscribers ahead.
The Commission, through its Director of Public Affairs, Tony Ojobo, had noted that although its earlier mediation with concerned stakeholders in the matter did not yield the desired result, the commission will do all within its regulatory power to ensure that subscribers continue to enjoy the services provided by the operator.
He further assured that that the NCC had taken proactive steps to cushion the impact of the takeover, without prejudice to the ongoing effort between Etisalat Nigeria and the banks towards a negotiated settlement.
Giving the same hint, Etisalat Nigeria’s Vice President, Regulatory & Corporate Affairs, Ibrahim Dikko, said the operations and services to the subscribers would remained normal and would in no way be affected by any changes in management or company shareholding.
“We will continue to deliver quality services to our subscribers. We will continue to tap into the rich, creative and innovative resources within our workforce to build a stronger business upon the stable foundation we have laid in our nine years of operations.”
While the NCC has renewed meetings with the CBN, the concerned banks and Etisalat Nigeria, its business as usual in the telecom company’s offices, as some of the staff who spoke to eBusiness Life pointed out that “there is no cause for alarm”. They expressed confidence that the company will come out of the imbroglio unscathed, with an amicable resolution to the debt issue.
This same confidence pervades in one of the receiving banks, with a staff pointing out that the banks have no intention of taking over since they cannot run a telecommunication by themselves. Rather, the banks want a negotiated settlement of the loan with a desire to keep the telecom company afloat.
Comments trailed on social media over the purported takeover, with pundits seeing it as a bad move and one that could herald a lot of negative effects both on the telecom industry and the country’s economy.
Osanebi Osakuni noted that it is incompressible that an investment in a flourishing sector of an economy could suffer such a financial blow. “Nigerians haven’t heard it all.”
Etisalat
Also, Obiorah Harry posited: “Not all that glitters is gold! Unless you dig into a company’s financials, you cannot determine its financial health. From what I have gathered from the net, the default was due to the deadly combo of unfavorable exchange rate and recession. Imagine borrowing $1.3 billion in 2013. The exchange rate currently is roughly twice what it was in 2013. Since Etisalat operates in Naira, it would now need twice the naira value of $1.3 billion to pay the same debt. Add to this the reduced purchasing power of Nigerians due to the recession, then you’ll see that it is not unrealistic for them to default on the loan.”
Another pundit, Peter Archibong raised questions begging for answers: “There’s definitely more to this than what’s reported…is etisalat unable to pay or unwilling to pay? how was the money used? does it mean that the parent coy (sic) brought in little or nothing to Nigeria just like Masiyiwa of Econet International did? or does it mean that etisalat international (sic – Group) is broke or can’t pay or is not interested in staying on in Nigeria? or that they can’t play the Nigerian game or what? or is someone taking over in undercover or something…this is a highly lucrative company and industry that no one wants to lose in a hurry so something is hidden somewhere”

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