Etisalat Nigeria Still In Talks Over Brand Use … Trend Follows India, Tanzania Experience

Etisalat-Group-DubaiIn a swift reaction to the recent announcement on the use of its brand name by Etisalat Group, Emerging Markets Telecommunication Services Ltd. (EMTS), the Nigerian subsidiary of Abu Dhabi- based Etisalat says it cannot be arm-twisted to change the brand since there is already a subsisting agreement between the two companies.

In a statement from Etisalat Nigeria, signed by Vice President, Regulatory and Corporate Affairs, Ibrahim Dikko, the company noted that the agreement with Etisalat Group entitles EMTS, trading as Etisalat Nigeria, to use the Etisalat brand, notwithstanding the recent changes within the Company.

It will be recalled that Etisalat Group, following its shares withdrawal from the Nigerian company, and subsequent change of Top Management and Board of Directors at EMTS, formally announced yesterday that it has severed relationship with Etisalat Nigeria, and mandated the Nigerian subsidiary to discontinue the use of its brand in Nigeria.

This was a fallout of the loan default issue between Etisalat Nigeria and a consortium of banks in which the Nigerian company was unable to fully repay a $1.2 billion (about N541.8 billion) medium-term syndicated loan facility granted it in 2013. The issue culminated into an agreement between the telecom firm and the banks for a restructuring of the debt and reconstitution of the Etisalat Nigeria management.

The loan agreed with 13 local banks in 2013 was a seven-year facility to refinance a $650 million loan and fund expansion of its network. Etisalat Nigeria missed payments in February after sharp falls in the value of the Nigerian naira bloated the loan value, making repayments difficult.

Etisalat Nigeria had already repaid $500 million of $1.2 billion in loans owed to banks before it defaulted in February due to a currency devaluation.

“Indeed, discussions are ongoing between EMTS and Etisalat Group pertaining to the continued use of the brand, and EMTS will issue a formal statement once discussions are concluded. The final outcome on the use of the brand in no way affects the operations of the business as our full range of services remain available to our customers,” Dikko assured.

The Etisalat Group had, on June 20, 2017, filled for a change in shareholding to the Abu Dhabi Securities Exchange in Abu Dhabi, United Arab Emirate.

The filing, with reference number Ho/GCFO/152/85, and dated June 20, 2017 signed by Etisalat Group Chief Financial Officer, Serkan Okandan, gave the collapse of restructured repayment talks as reason for the filing. A claim a source in one of the banks refuted, stating the Abu Dhabi company wanted an outright cancelation of the extra interest based on increased forex rate.

With over 20 million subscribers, Etisalat Nigeria owns 14 percent market share in Nigeria, Airtel 19 percent, Globacom 20 percent and MTN has 47 percent.

According to Dikko, “EMTS launched in Nigeria in 2008 with “0809ja” to affirm the “Nigerianness” of our origin and sphere of influence. In our 9 years of operation, we have remained a prime driver and avid supporter of the Nigerian spirit of excellence, and we will continue to stay true to our “Naijacentric identity”.

He further noted that Nigeria remains “the soul of EMTS’ business”. “EMTS is here to stay and we wish to assure our esteemed customers that our core values of youthfulness, customer-centricity and innovation will remain the pillars on which we operate. We thank our esteemed customers for their abiding faith in us.”

Analysts have wondered on the business integrity of the Etisalat Group because the pullout from the Nigerian operation follows similar operational debacle the Group have had in the past with countries like India and Tanzania.

In 2014, the Abu Dhabi- based Etisalat Group pulled out its controlling shares from Zantel Tanzania after about 15 years of operation in the country over a $96 million bank debt.

Etisalat bought a 34 per cent stake in Zantel in 1999, in 2010, upping its holding to 65 per cent. Zanzibar’s government owns 18 per cent and Meeco International Company 17 per cent.

An Etisalat presentation before its pull out for its first-quarter results blamed the Sim Card registration programme in Tanzania as reason for the degenerating Zantel’s subscriber base. But Vodacom and Airtel added customers over the same period.

The company does not provide financial details of Zantel’s operations, but the bond prospectus omits Zantel from a list of foreign subsidiaries that made a “positive contribution” to the parent’s operating profit, implying the Tanzanian operator was loss-making.

According to Reuters’ calculations, Zantel provided 0.8 per cent of Etisalat’s revenue or Dhs311 million ($84.67 million) year before the pull out.

In 2012 Etisalat shut down its operations in India following India’s Supreme Court cancellation of licences belonging to 10 mobile operators as a result of an investigation into corruption in the allocation of second-generation (2G) mobile licences in 2008.

The company, which entered India following the 2008 licensing process, via the acquisition of a 45 per cent stake in Swan Telecom for $900m, later renamed Etisalat DB, as part of a joint venture with DB Realty, an Indian real estate company, said in a statement that the decision was taken “to avoid incurring further costs at this time of rapid change and continued uncertainty in the Indian telecommunications sector”.

 

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