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Tag: Etisalat

  • Etisalat, Comptel partner on BlazeOn data solution

    Nigeria’s most innovative and customer-centric telecommunications company, Etisalat Nigeria has launched a time-based mobile data solution, called BlazeOn, powered by Comptel’s FWD solution.

    BlazeOn, an Android app available to Etisalat customers, was launched in partnership with Comptel Corporation at an event, which held at the Oriental Hotel, Victoria Island Lagos.

    Its Director, Consumer Segment, Adeolu Dairo, said: “Most internet users in Nigeria don’t know how much mobile data they consume while browsing or streaming. BlazeOn, our time-based data plan addresses this situation as it redefines the purchase experience for our customers and empowers them to buy Etisalat Easyblaze data plans in minutes and hours.

    “BlazeOn demonstrates Etisalat Nigeria’s commitment to deliver superior customer experience to its subscribers. Our goal is to create more value for our customers by improving quality, reducing cost and introducing innovation. By getting more people online, we hope to empower Nigerians to reach their potential and thereby stimulate the economy.”

    FWD is a cloud-based solution that enables time-based data packages to be purchased directly from end user devices.

  • Why Etisalat should be saved

    Etisalat, Nigeria’s fourth largest mobile operator is currently enmeshed in a debt crisis with 13 creditor banks. It would be recalled that the telecommunications (telco) firm obtained $1.2bn loan – a medium-term seven-year facility for the purpose of expanding its network and improving the quality of service on its network.

    However, the economic downturn of 2015 and sharp devaluation of the naira negatively impacted on the dollar-denominated loan by driving up the loan value, thus prompting Etisalat to request a loan restructuring from the consortium of banks. Regardless of the situation, Etisalat Nigeria is still seen as a viable investment.

    Prior to this time, Etisalat had consistently and conscientiously met up with its payment obligations. It had, in fact, paid about 42 percent of its original loan taken from the consortium of banks. In an official statement signed by Ibrahim Dikko, Etisalat vice-president of corporate affairs, he stated that: “As at today, we can categorically state that the outstanding loan sum to the consortium stands at $227m and N113bn, a total of about $574m if the naira portion is converted to US Dollars. This in essence means almost half of the original loan of $1.2bn, has been repaid. Etisalat continued to service the loan up until February 2017 when discussions with the banks regarding the repayment restructuring commenced.”

    Meanwhile, Nigeria’s economy contracted by -1.5 percent in 2016 as it slipped into a recession that saw inflation figures rise double digits to 18 percent last year. But the economy is poised to get out of recession before the fourth quarter, as inflation rate dropped to 16% in May. Also, the Central Bank of Nigeria (CBN) has sanitised the foreign exchange market such that both parallel and interbank rate have found commonality. Thus, Etisalaat Nigeria would return to keep honouring all its obligations.

    Etisalat Nigeria shareholders may yet emerge the biggest losers in the current situation unless a resolution is urgently reached. The most vulnerable are private equity holders from Nigeria. “All of the infrastructure investment and services for which the loan was secured, were paid through our banks and these are verifiable”, according to Dikko and the telco firm have managed these infrastructure so well as to deliver excellent services.

    The creditors lack the technical expertise to manage a telecommunications outfit. An erosion of shareholder value may precede a takeover. Good enough, the banks have maintained that they have no desire to run a telecommunications company. Their only intention is to recover their money. A strong brand like Etisalat Nigeria with over 23 million subscribers’ base requires minimal disruption of operations to keep their market share in a highly competitive market where subscribers are spoilt for choice and be in a position to repay their outstanding loan.

    Job losses would leave the economy worse-off.  Etisalat Nigeria currently have about 2,000 workers, 115 Permanent Experience centres, 10 Temporary Experience centres, 90 kiosks at Total filling stations all spread nationally. In addition, thousands of more Nigerians are connected with the company either as vendors, sub-contractors, ancillary support services and many indirect businesses have been built around the company’s service offerings.

    If the company goes under, Nigeria’s economy will take a big hit. However, if the loan deal is not resolved, the banks will see their bottom lines severely affected with implications for their own operations, shareholders and the economy. Hence, the Etisalat Nigeria situation has all the ingredients of a ticking economic time-bomb. Skilled bomb diffusion experts will attest to the fact that patience and well-thought out approaches lead to the best results.

    The impasse puts to test the government’s resolve to attract new investments while protecting businesses already in operation in the country but are now challenged. At a time, the country is improving the ease of doing business, it becomes more imperative to protect the investments already secured in the country.

    Admittedly, the Nigerian Communications Commission (NCC) and the CBN have played critical roles to resolve the loan crisis. The NCC waded in to say the group of lender banks cannot takeover Etisalat Nigeria until they have fulfilled some regulatory hurdles. Tony Ojobo, Director, Public Affairs, NCC said the lender banks must take note of relevant provision of the Nigerian Communications Act (NCA) 2003 as well as relevant provisions of the laws guiding the transfer of licences issued operators by the telecoms regulator.

    Section 38 and Sub section 1 of the NCA says; “The grant of a license shall be personal to the licensee and the license shall not be operated by, assigned, sub licensed or transferred to another party unless the prior written approval of the commission has been granted;” Sub Section 2 of the same provision equally states that, “A licensee shall at all times comply by the terms and condition of the license and the provision of this act and its subsidiary legislation.”

    Umaru Danbatta, executive vice chairman of the NCC told journalists in Lagos last month, that the Nigerian telecommunication sector has been a major contributor to Nigeria’s gross domestic product (GDP), adding between N1.4 trillion to N1.5 trillion on a consistent basis in the last one and half years. It has also contributed about nine per cent to the GDP in the first quarter of 2017 despite a recession. Etisalat Nigeria has been part of this success story. Stakeholders want to consolidate on the gains made in the sector.

    In situations where debtors fail to meet loan obligations, the management of the debtor institution may be taken over by the bank, a downsizing of operations and asset stripping are usually subsequent actions. In many cases, the debts are not fully recovered and the bank’s bottom-line are severally affected. If the company goes under, the customers of the company will lose the benefit of the network expansion programme, thus, the real motive the company borrowed the money in the first place would be defeated.

    In a win-win situation; Etisalat stays afloat, banks get their money back, employees retain their jobs, subscribers continue to enjoy the network’s excellent services and government also continues reaping its taxes from the network.

     

    • Tsav, a telcom enthusiast and public affairs analyst, writes from Lagos.
  • $1.2b loan: Banks’ shareholders urge Etisalat to pay

    $1.2b loan: Banks’ shareholders urge Etisalat to pay

    Some shareholder groups in the capital market has urged Etisalat Nigeria to settle the $1.2 billion debt it owed 13 commercial banks to avoid its takeover.

    A cross section of the shareholder groups stated this in an interview with the News Agency of Nigeria (NAN) in Lagos yesterday.

    They insisted that the company must settle the debt for the banks to meet up with their dividend obligations.

    National Coordinator, Progressive Shareholders Association of Nigeria, Mr Boniface Okezie, advised Etisalat to settle the debt owed the commercial banks to avoid a legal action.

    He said the affected banks should approach the court for receivership if the telco failed to settle the debt, adding that the banks had obligations to their shareholders in terms of dividend payment at the end of the financial year.

    Also, the Chairman of Nigeria Professional Shareholders Association,  Mr Godwin Anono, said the firm should settle the debt and desist from making unnecessary noise about the whole thing.

    He said the transaction was in line with customer-bank relationship, noting that the terms and conditions must be obeyed.

    Anono said further that the shareholders were in support of the banks to acquire the firm if it failed to settle the loan.

    “This is like any other transaction, it’s not government business and I stand on existing protocol that the banks should acquire the company,’’ he said.

    In his view, Mr Sewa Wusu, Head Research, SCM Capital Ltd., said the issue of loan between Etisalat and the consortium of banks was a customer-bank relationship which ought to be settled amicably with terms agreeable between both parties.

  • Banks battle for Etisalat’s soul

    Banks battle for Etisalat’s soul

    A $1.2billion loan raised by Etislat from a consortium of 13 local lenders is testing the wits of the telecom operator, which did not enjoy some of the concessions the earlier birds got after the liberalisation of the telecoms space almost two decades ago. LUCAS AJANAKU writes that an amicable settlement of the face-off will be in the interest of the industry, the lenders and the stakeholders.

    About five years ago, Etisalat Nigeria secured a $1.2billion medium-term seven-year loan from local lenders to expand its network and make it to accommodate more customers.

    The repayment of the facility was not in the public space until an economic downturn of 2015 led to sharp devaluations of the naira, which negatively impacted the value of the dollar-denominated loan. This situation was further compounded by  the Central Bank of Nigeria (CBN) bizarre policy, which restricted access to foreign exchange/dollars. That policy forced many going-concerns to shut down abruptly.

    According to the telco, the outstanding debt stands at $227million and N113billion, a total of about $574million if the naira portion is converted to US Dollars. This in essence means that almost half of the original loan of $1.2billion has been repaid.

     

    Repayment hitch

     

    Etisalat continued to service the loan until sometime in February this year, when discussions with the banks regarding the repayment restructuring commenced. The $1.2billion loan was efficiently serviced up till earlier this year when discussions with the banks commenced, the telco added.

    Etisalat’s engagements to renegotiate the terms of the loan have gone on for a while and are yet to be finalised, though at an advanced stage.

    Some of the options being considered include a restructuring of the shareholding/change in ownership. Final arrangements regarding ownership and board structure are still at the development stage.

    Sequel to this negotiation, Etisalat Group announced to the Abu Dhabi Stock Exchange that it was transferring its shares in the company to an appointed security trustee of the banks.

    The recent announcement by the Group is to the effect that it was transferring its shares in Etisalat Nigeria to a security trustee, who will hold the shares on behalf of the consortium. The security trustee is the vehicle employed by the banks to hold the shares on behalf of the consortium.

    What has effectively happened was a ‘change in ownership’ not a receivership, bankruptcy or winding up and operations will continue and subscribers can continue to access services on the network as usual.

     

    Lenders seek

    investigation

     

    A new dimension was introduced to the loan deal when the banks urged the Federal Government to investigate the telco over the loan.

    But the telco swiftly denied any wrong doing. It denied being under any investigation by the Economic and Financial Crimes Commission (EFCC), over an alleged petition to “the Federal Government asking that Etisalat be investigated” on how the funds from the syndicated loans were utilised.

    Its Vice President, Regulatory & Corporate Affairs, Ibrahim Dikko, in a statement, said: “Etisalat wishes to categorically affirm for the avoidance of doubt that the reports are patently false and most unfortunate, considering the damage such misleading information can have not only on our business, but indeed, on the telecommunications industry and the country as a whole.

    “A simple interrogation of the rigorous process for securing a syndicated loan from a consortium of reputable banks would have exposed the truth to the original writer of this story and other media channels, who have subsequently re-circulated the falsehood without interrogation or verification.

    “Concerned parties have access to our books and do not require an investigation into how the loan sum was utilised. All of the infrastructure investment and services for which the loan was secured,”he said.

    He continued:”Contrary to the widely reported misrepresentations about Etisalat Nigeria’s debt obligation to the consortium of 13 banks, it has become pertinent to set the records straight. Prior to this time, Etisalat had in fact, consistently and conscientiously met up with its payment obligations. As at today, we can categorically state that the outstanding loan sum to the consortium stands at $227million and N113billion, a total of about $574million if the naira portion is converted to US Dollars. This in essence means almost half of the original loan of $1.2billion, has been repaid. Etisalat continued to service the loan up until February 2017, when discussions with the banks regarding the repayment restructuring commenced.”

     

    Is loan death sentence?

     

    A leading frontier and emerging markets investment firm based in the United Kingdom (UK), Exotix Capital, said the impact of the facility is manageable and not necessarily a death sentence on the telco.

    The firm in a research report entitled: “Nigeria Banks”, released during the week, said the impact loan was “modest”.

    “We estimate a modest impact on banks. At a headline level, loans to Etisalat Nigeria represent 1.9 per cent of aggregate bank loans. Likewise on our sensitivity analysis, the Etisalat loans would on average have a 12 per cent, two per cent and 0.3bp impact on our FY17f net profit, equity and capital adequacy ratios for the banks, respectively. We believe the banks should easily be able to absorb a shock of this magnitude,” Head of Equities Financials Research, Rahul Shah and Equity Research Analyst, Jumai Mohammed, said.

    The report ruled out any likely bailout by the Asset Management Corporation of Nigeria (AMCON), citing the current weak financial state of the corporation, but said the CBN’s directive to the lenders to halt further action on the debt could provide some short term respite.

    “Is a CBN bailout likely? Given the weak state of AMCON finances, we think this is unlikely. However, the CBN recently directed exposed banks to halt further action on the debt, meaning some form of bridge funding could be under consideration to cover the period until a new buyer steps in,” the report noted.

    The report urged parties to come to favourable terms for loan restructuring. “However, in the event that these banks aren’t able to restructure the loans at favourable terms with the company, then one of two things will have to happen; the banks swap their loans to equity, recognising the loans as investments. We don’t expect banks to have the capacity to take on such investments or be a willing party to a loss-making underlying asset. The banks restructure the loan, although in the near term they will be required to make provisions on the loan, until they find a buyer. We believe the second scenario is more likely, but the banks could possibly resolve with a new buyer before the end of the year,” the report added.

     

    Lenders reject

    repayment plan

     

    The lenders said they rejected a $58.9 million offer by the telco as full and final payment for the $588.6million it was owing them.

    The loan comprises N114 billion ($361.6 million) in local currency and $227 million in foreign currency, putting the total obligation to the banks at $588.6 million. The source said Etisalat Nigeria also has some unsettled obligations to its other business partners.

    The lender rejected the offer because they said it will hurt shareholders’ interest, deplete their capital base and derail the stability in the banking sector.

    According to the lenders, the repayment plan was a product of an emergency meeting convened in London by the parties.

    According to sources, the banks had cut the interest charged on the loan by six per cent below market rate, agreed to absorb between 20 and 30 per cent of the debt burden and allow the telco pay-down the loan within eight years.

    Speaking through sources, the lender  are also going through challenges, adding that the telco has the capacity to repay the loans because of the strength of its parent company.

    According to one of the sources, the loan was restructured, with the borrower being given additional time to ensure that it liquidates the loan. But while the final document for the loan restructuring was being reviewed by the legal council, the company asked for a ‘stand still’.

    According to Etisalat, its management and the banks are in full agreement over the unhindered operations of the business and efforts are on to ensure that its day to day operations are not affected and subscribers’ experience remains top notch.

    Etisalat Nigeria will undergo a transition period while it works with the banks to secure new investors. With new investors, there is a possibility of a change in brand, but this will be clear once the restructuring is concluded.  Discussions on the finer details of the agreements are still on.

    Etisalat’s strategic goals remain unchanged; to serve customers with excellence, continue to innovate and maintain network quality.  The source said the banks had not taken over the company, because they do not own shares in there, the directors have not been changed and the lenders do not have expertise in running telcos.

     

    NCC reacts

     

    The Nigerian Communications Commission (NCC) said its attention was drawn to a planned takeover of Etisalat by a consortium of banks.   Its Director, Public Affairs, Tony Ojobo, in a statement, said the Commission was aware of Etisalat’s indebtedness to the consortium; in conjunction with the CBN, adding that it mediated by holding several meetings with the banks, Etisalat and other stakeholders with a view to resolve the issue.  However, it lamented that the meetings did not yield the desired results.

    “In view of the recent development, the NCC wishes to reassure all stakeholders in the telecommunications sector, in particular the subscribers on the Etisalat Network, that the Commission will ensure that the integrity of Etisalat Network is not compromised.

    “Accordingly, the Commission has drawn the attention of the banks to provisions of the Nigerian Communications Act (NCA) 2003 Section 38:

    “Sub section 1 – The grant of a license shall be personal to the licensee and the license shall not be operated by, assigned, sub licensed or transferred to another party unless the prior written approval of the commission has been granted;

    “Sub section 2 – A licensee shall at all times comply by the terms and condition of the license and the provision of this act and its subsidiary legislation,” the statement read.

    The regulator said while the banks and Etisalat are working at resolving the issues, it is asuring subscribers that they will continue to enjoy the services provided by Etisalat.

  • $1.2b Etisalat debt: Banks consider legal action against core investor

    $1.2b Etisalat debt: Banks consider legal action against core investor

    The 13 banks that raised $1.2billion loan for mobile operator Etisalat Nigeria may press criminal charges against directors of Mubadala Development Company of the United Arab Emirates (UAE).

    This is the latest option the banks are considering to recover the outstanding part of the facility.

    It was gathered that the banks held a meeting at the weekend to consider engaging  a London-based counsel to assemble a team of lawyers to press charges against Directors of Mubadala for abdicating their contractual obligations.

    A source close to the meeting said the banks explored the legal option to save Etisalat Nigeria which they still see as a viable business. They are also said to be interested in ensuring the continuity of Etisalat Nigeria.

    The source said: “The banks have a different position now. The first thing considered at the meeting is the legal option to compel Mubadala through a Mareva injunction to honour its obligations to the consortium. This is because other than this loan crisis, Etisalat is a viable business. The banks have access to theirs books and they can see that despite the crisis, Etisalat’s business value has not diminished. That is why the banks took that position that they are not interested in a takeover of the business. They are in fact more sympathetic to the Nigerian investors led by Hakeem Belo-Osagie and are willing to work with him to steady the ship and keep Etisalat business going while searching for new investors.”

    The source said the lenders also felt that there was no need dissipating needless time and energy on the option of hostile takeover considering that the law is sacrosanct on that. “They realised the licence is not transferrable. So, they alternatively opted to pursue Mubadala for a recovery of the outstanding sum of money from the loan. The banks are said to be convinced of this option considering what they perceived to have been a trend with Mubadala. In each of the country where Mubadala had exited, it left behind burdens of unpaid loans,” the source added.

    Another source close to one of the lenders who corroborated the development, said: “The banks rose from their weekend meeting with a strong resolve that Mubadala may have tried this trick with the wrong customers this time around. Yes, I can confirm they will press charges.

    A leading Investment Analyst who works as External Consultant to the Central Bank of Nigeria (CBN), speaking on condition of anonymity, has advocated a stronger involvement of the Federal Government at the diplomatic, economic and trade relations levels as options to save Etisalat Nigeria.

    According to him, government needs to reach out to the Abu Dhabi government to rein in the Directors of Mubadala and compel them to respect a contractual loan obligation they entered into in Nigeria with the consortium of banks. At the economic level, the government must provide all necessary support under its “Ease of Doing Business” policy to new investors the Emerging Markets Telecommunications Services’ team led by Hakeem Belo-Osagie may be reaching out to. Key members of the nation’s Economic Management team such as the Minister of Industry, Trade and Investment, Minister of Finance and the Central Bank Governor can be directed to join the NCC to provide all necessary concessions to enable the new investors make their decision and settle in quickly,” he counseled.

    “The second leg of the proposed economic intervention is for the government to direct the Sovereign Wealth Fund to invest in Etisalat considering its continued viability as a business. Telecom is a critical national infrastructure that represents the backbone of business, economic development and even national security. The intervention of the Sovereign Wealth Fund will not only preserve the jobs of thousands of Nigerians directly employed by Etisalat Nigeria but that of scores of other Nigerians indirectly employed in the entire value chain of the Etisalat business,” he said.

  • Banks reject Etisalat’s $58.9m payment plan

    Banks reject Etisalat’s $58.9m payment plan

    Twelve commercial banks have rejected a $58.9 million offer by Etisalat Nigeria as full and final payment for the $588.6 million the telecom giant owes, The Nation learnt yesterday.

    The loan comprises N114 billion ($361.6 million) in local currency and $227 million in foreign currency, putting the total obligation to the banks at $588.6 million. The source said Etisalat Nigeria also has some unsettled obligations to its other business partners.

    A senior manager in one of the banks told The Nation that the lender rejected the offer because it was not a fair deal, which will hurt the interest of shareholders, deplete their capital base and derail the stability in the banking sector.

    The source said Etisalat Nigeria came up with the repayment plan after an emergency meeting held between the lenders and the telecom giant last month in London.

    After the meeting, Etisalat Nigeria came up with the loan liquidation plan, which the banks rejected.

    The banks had decided to cut the interest charged on the loan by six per cent below market rate, agreed to absorb 20 to 30 per cent of the debt burden and allow the firm to pay-down the loan within eight years.

    The source, who pleaded not to be named because he is not permitted to talk on the matter, explained that the banks remained entrepreneurs and custodians of depositors’ funds, which they must protect.

    The source said: “It is a challenging time for the banks. A lot of Nigerians depend on us as depositors. We have shareholders who have invested in the banks and want dividends. Etisalat has the capacity to repay the loans. Etisalat flew their private jet to Nigeria from United Arab Emirates and obtained its operating licence without borrowing from any bank.  They are heavy guys, and can pay their debt.”

    “The firm has a strong parent company who is one of the best investors in the world.”

    The source said that these credentials convinced the lenders to lend to Etisalat Nigeria. “Even though we cannot see all the benefits, but the telecom sector contributes about eight per cent to the national Gross Domestic Product, and the banks saw the need to support the company.

    “The country cannot have the Smart City being canvassed without the telecom sector. We gave out the loans to support the economy,” the source said.

    According to the source, the loan to the company was restructured, with the borrower given additional time to ensure it liquidates the loan, but while the final document for the loan restructuring was being reviewed by the Legal Council, the company asked for a ‘Stand Still’.

    The source said the banks were not questioning the capacity of Etisalat Nigeria to liquidate the loan, but what is lacking is the company’s willingness to pay back the loan.

    The source said the banks had not taken over the company, because they do not own shares in the company, the directors are not changed and the lenders do not have expertise in running telcos.

    Etisalat Nigeria yesterday denied reports that it was being investigated by the Economic and Financial Crimes Commission (EFCC), following a petition to “the Federal Government asking that Etisalat be investigated” on how the funds from the syndicated loans were utilized.

    In a statement, its Vice President, Regulatory & Corporate Affairs,  Ibrahim Dikko, said: “Etisalat wishes to categorically affirm for the avoidance of doubt that the reports are patently false and most unfortunate, considering the damage such misleading information can have not only on our business, but indeed on the telecommunications industry and the country as a whole.

    “Concerned parties have access to our books and do not require an investigation into how the loan sum was utilised. All of the infrastructure investment and services for which the loan was secured, were paid through our banks and these are verifiable,” he said.

  • Etisalat Takeover: NCC assures subscribers of network’s integrity

    Etisalat Takeover: NCC assures subscribers of network’s integrity

    Amid the move to takeover of Etisalat by a consortium of banks, the Nigerian Communications Commission (NCC) has assured subscribers that the network’s integrity would not compromised.

    The Director, Public Affairs of NCC, Mr Tony Ojobo, said in a statement on Wednesday in Lagos that the commission’s attention had been drawn to the planned takeover by the consortium of banks.

    Ojobo said that the regulatory body was aware of the indebtedness of Etisalat to the consortium.

    According to him, the NCC in conjunction with the Central Bank of Nigeria (CBN), has mediated by holding several meetings with the banks, Etisalat and other stakeholders to find a solution.

    “Regrettably, these meetings did not yield the desired results.

    “The NCC wishes to reassure about 21 million Etisalat subscribers that it will do all within its regulatory power to ensure that Etisalat subscribers continue to enjoy the services provided by the operator.

    “The commission has taken proactive steps to cushion the impact of the takeover; this is without prejudice to the ongoing effort between Etisalat and the banks toward a negotiated settlement.

    “NCC wishes to reassure all stakeholders in the telecommunications sector, in particular the subscribers on the Etisalat network, that it will ensure that the integrity of the network is not compromised.’’

    The statement said the commission had drawn the attention of the banks to provisions of the Nigerian Communications Act (NCA) 2003 Section 38: Sub-sections 1 and 2.

    “Sub-section 1 says: the grant of a license shall be personal to the licensee.

    “The license shall not be operated by, assigned, sub-licensed or transferred to another party unless the prior written approval of the commission has been granted;

    “Sub-section 2 says: A licensee shall at all times comply by the terms and condition of the licence and the provision of this act and its subsidiary legislation,’’ it said.

    The director said that while the banks and Etisalat were working at resolving the issues, the commission assured that subscribers would continue to enjoy the services provided by the telecommunications company.

    In March, a consortium of 13 banks, both foreign and Nigerian, had wanted to take over the operations of Etisalat over a loan facility totalling 1.2 billion dollars, obtained in 2015.

    The banks said their attempt to recover the loan was due to the pressure from the Asset Management Company of Nigeria (AMCON), demanding immediate cut down on the rate of non-performing loans.

    The NCC and CBN waded into the matter to ensure an amicable resolution of the issue.

    However, after three months of fruitless deliberations, the consortium of banks is finally taking over the telecommunications company.

  • Access Bank, others may take over Etisalat

    Access Bank, others may take over Etisalat

    TELECOMS firm Etisalat Nigeria is on the verge of being taken over by its bankers following the collapse of talks on its payment of a $1.72 billion (about N541.8 billion) debt.

    The lenders may take over the firm as soon as the legal requirements are met.

    The eventual take-over is as a result of the inability of Emerging Markets Telecommunications Services (EMTS), promoted by-one time Chairman, United Bank for Africa Hakeem Bello-Osagie, to agree with the banks on the debt restructuring plan.

    However, Dutch company EMTS Holding BV,  has up to June 23 to complete the transfer of 100 per cent of the telco’s shares in Etisalat to the United Capital Trustees Limited, the legal representative of the consortium of banks.

    Etisalat Group, the parent company of Etisalat Nigeria, gave this indication yesterday in a letter sent to the Abu Dhabi Securities Exchange in Abu Dhabi, United Arab Emirate (UAE).

    But Etisalat Nigeria Vice President, Regulatory & Corporate Affairs, Ibrahim Dikko said discussions were ongoing. In a statement, he said: “Discussions are on-going regarding other issues such as the trading name during this transition phase. Operations and services to our subscribers remain normal and will in no way be affected as we 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.”

    The Nigerian Communications Commission (NCC) which, alongside the Central Bank of Nigeria (CBN)  brokered truce between the telco and its lenders warned that the provisions of the Nigeria Communications Act must be strictly followed.

    NCC spokesman Tony Ojobo, while assuring the over 21 million customers of the telco that the regulator would do its best to ensure seamless service delivery, warned that the take over of the telco must follow the letters of the law.

    Ojobo said: “In view of the recent development, NCC wishes to reassure all stakeholders in the telecoms sector in particular the subscribers on the Etisalat network that the Commission will ensure that the integrity of Etisalat network is not compromised.

    “Accordingly, the Commission has drawn the attention of the banks to provisions of the Nigerian Communications Act (NCA) 2003 Section 38:

    “Sub section 1 – The grant of a license shall be personal to the licensee and the license shall not be operated by, assigned, sub licensed or transferred to another party unless the prior written approval of the commission has been granted;

    “Sub section 2 – A licensee shall at all times comply by the terms and condition of the license and the provision of this act and its subsidiary legislation.”

    A letter dated June 2017, with No. Ho/GCFO/152/85 endorsed by Etisalat Group Chief Financial Officer, Serkan Okandan, lamented that efforts by EMTS to restructure the repayment of the syndicated loan by a consortium of banks to Etisalat Nigeria collapsed.

    “Further to our announcement dated 12 February, 2017, Emirates Telecommunications Group Company PJSC, ‘Etisalat Group’ would like to inform you that EMTS (‘the company), 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).

    “Subsequently, discussions between EMTS and the EMTS lenders did not produce an agreement on a debt restructuring plan.

    “Accordingly, the company received a default and security Enforcement Notice on 9 June 2017 requesting EMTS Holding BV (EMTS BV) established in the Netherlands, and through which Etisalat Group holds its interest in the company) requiring EMTS BV to transfer 100 per cent of its shares in the company to the United Capital Trustees Limited (the Security Trustee”) of the EMTS Lenders by 15 June 2017.

    “Subsequently the EMTS lenders extend the deadline for the share transfer to 5.00 pm Lagos time on 23 June 2017,” the filing said.

    The telco has been under pressure since 2016, following the demand notice for the recovery of the loan facility it obtained from a consortium of banks in 2015.

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

    Unable to meet its debt servicing obligations agreed last year, the consortium, prodded by their foreign partners, threatened to take over the company and its assets across the country.

    But the intervention of the Nigerian Communications Commission (NCC) and its financial sector counterpart, the Central Bank of Nigeria (CBN) succeeded in persuading the banks to rethink their threat and give Etisalat a chance to renegotiate the loan’s repayment schedule.

     

  • Access Bank, others take over Etisalat over N541bn debt

    Access Bank, others take over Etisalat over N541bn debt

    A consortium of banks, led by Access Bank Plc and other Nigerian and foreign banks, has taken over the management of Etisalat Nigeria, effective from June 15.

    The takeover followed Etisalat’s inability to repay $1.7 billion (N541 billion) loan sourced from the banks.

    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.

    The Emerging Markets Telecommunications Services (EMTS) led by former Chairman of United Bank for Africa (UBA), Hakeem Bello-Osagie, had tried to reach agreement on debt restructuring with the banks, but the move collapsed at the last time.

    However, EMTS Holding BV, established in the Netherlands, has up to June 23 to complete the transfer of the company’s 100 percent shares in Etisalat to the United Capital Trustees Limited, the legal representative of the consortium of banks.

    Etisalat Group, the parent company of Etisalat Nigeria, announced the takeover in a filing 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’s Chief Financial Officer, Serkan Okandan, said efforts by EMTS to restructure the repayment of the syndicated loan sourced from a consortium of banks to Etisalat Nigeria collapsed.

    It said, “Further to our announcement dated 12 February, 2017, Emirates Telecommunications Group Company PJSC, “Etisalat Group” would like to inform you that Emerging Markets Telecommunications Services Limited “EMTS” (“the company), established in Nigeria and an associate of Etisalat Group with effective ownership of 45% and 25% ordinary and preference shares respectively, defaulted on a facility agreement with a syndicate of Nigerian banks (“EMTS Lenders”).

    “Subsequently, discussions between EMTS and the EMTS Lenders did not produce an agreement on a debt restructuring plan.

    “Accordingly, the company received a default and security Enforcement Notice on 9 June 2017 requesting EMTS Holding BV (EMTS BV) established in the Netherlands, and through which Etisalat Group holds its interest in the company) requiring EMTS BV to transfer 100 per cent of its shares in the company to the United Capital Trustees Limited (the Security Trustee”) of the EMTS Lenders by 15 June 2017.

    “Subsequently the EMTS Lenders extended the deadline for the share transfer to 5.00 pm Lagos time on 23 June 2017.”

     

  • $1.2b loans: Etisalat, banks end talks this week

    Etisalat Nigeria has said it is expecting the closure of discussion about the resolution of issues around its $1.2billion indebtedness to a consortium of local lenders this week.

    Its Vice President, Regulatory & Corporate Affairs, Ibrahim Dikko, said the telco was aware of news reports that Mubadala Development Company, the majority shareholder of the company, is exiting the business.

    He said while it was premature at this stage of the discussions to affirm that this is the conclusive option, Etisalat Nigeria considers it pertinent to state that parties to the negotiation are considering a number of options and discussions are at an advanced stage regarding the syndicated loan agreement with the banks.

    Dikko said: “It will therefore be presumptive and in bad faith to begin to predict the outcome. Discussions have so far been quite collaborative and we expect to reach a final resolution next week, by which time we will be in the position to make a definitive announcement.

    “Etisalat Nigeria can confirm that negotiations with the consortium of banks regarding the syndicated loan agreement signed in 2013 have reached an advanced stage. As noted in an earlier statement, we are considering a number of options and are not taking anything off the table at this time.

    “Etisalat remains a viable business, having recorded its best financial year in 2016. Parties are keen to ensure that the ongoing discussions and eventual outcome do not affect the day to day operations of the business whether now or after the announcement of our agreement. All parties have continually demonstrated an interest in the continued operations of Etisalat as a business as it remains the backbone of millions of small business owners; multinationals, government and, indeed, Nigerian subscribers in general.

    “Etisalat therefore appeals to its partners in the media to exercise some restraint in speculating the outcome of the ongoing discussions being held behind closed doors. We appreciate the tremendous support we have received since inception and count on the continued support owf our media partners as we navigate this path and emerge as a stronger business.”