Banks say not interested in Etisalat takeover, want loan repaid

…as CBN invites both parties for talks today

Nigerian banking sources have told BusinessDay that they are not interested in taking over the business of Etisalat Nigeria, but want the telecommunications firm to honor its loan obligations.
Several banking sources Businessday spoke to yesterday said contrary to speculation that the banks had held debt discussions with Etisalat, no such talks had taken place as yet.
The Nigerian Communications Commission (NCC)has, however, intervened in the loan issue between Etisalat Nigeria and a consortium of commercial banks and held a meeting with the Central Bank of Nigeria (CBN) yesterday to discuss the implications of the missed loan.
The CBN has also now agreed to invite Etisalat management and the banks to a meeting today (Friday) towards finding an amicable resolution, Businessday gathered.
This means that prior to the missed debt payment deadline, Etisalat had not engaged with the said banks to inform them of possibilities of missing the February 2017 payment date.
“We had been engaging with the NCC about the difficulties faced by telecommunications operators,” BusinessDay sources close to Etisalat Nigeria said.
The United Arab Emirates (UAE) owned Emerging Markets Telecommunications Services (EMTs) in May 2013, signed a $1.2 billion medium term syndicated loan facility with 13 Nigerian banks for its telecommunications firm, Etisalat Nigeria, to refinance the existing commercial medium term debt of 650 million and expand its network.
Banks involved in the loan deal include: Zenith Bank, GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.
Access Bank’s exposure is N40 billion ($131 million), the CEO of the Tier-one Nigerian lender said on Thursday.
Access Bank chief executive, Herbert Wigwe, told an analysts’ call that Etisalat had converted a shareholder loan to the Nigerian arm to equity to free up cashflows and that it may need to bring in fresh equity.
Olusola Teniola, President, Association of Telecommunications Companies of Nigeria told BusinessDay in a telephone interview that it may however be difficult for foreign shareholders to repay loans taken by Etisalat Nigeria.
“Also, we should be mindful of the fact that we are in a recession, Nigeria’s economy was growing at 7 percent when the loan was taken, but we’re now at minus 1.5 percent, so you cannot expect foreign direct investment to increase and no foreign shareholder is bound to pay the loans,” Teniola said.
On how the company is planning to pay its debt with or without forex scarcity, Ibrahim Dikko, Vice President, Regulatory Services, Etisalat Nigeria said that the company was now looking at “all the options”, which could include converting the loan into naira, but did not want to anticipate the outcome of talks with the lenders scheduled for today.
In the last few years, telecommunications firms took syndicated dollar denominated loans from Nigerian banks to expand their networks and roll out next generation technology.
Emirates Telecommunications Group (Etisalat) owns a 40 percent stake in its Nigerian affiliate, which accounted for around 3.7 percent of the group’s revenue in 2013.
Dikko said the business performed well last year and it was still in profit at the level of earnings before interest, tax, depreciation and amortisation (EBITDA), while loan repayments had been up to date “until recently”.
Apart from the inability to pay back loans as a result of foreign exchange scarcity, the Nigerian Communications Commission (NCC) has attributed the degenerating Quality of Service (QoS) provided by mobile network operators to the inaccessibility to foreign exchange by operators.
Umar Danbatta, Executive Vice Chairman (EVC), NCC asked the Central Bank of Nigeria (CBN) to ease its foreign exchange policies and make foreign exchange readily available to telecommunications operators who need it to purchase vital operational infrastructure.
Hassan Jamil, Chief Technical Officer (CTO), MTN Nigeria said one of the reasons why the quality of service from operators is dropping is because foreign exchange cannot be transmitted to vendors.
“The demand for both voice and data services are on the rise but we are unable to catch up on investment because of scarce dollar availability,” Jamil said.
Many Nigerian businesses have recently struggled with access to dollar for their operations. But the Central Bank of Nigeria has in the last two weeks significantly increased its supply of dollars in the interbank marketing selling US$1.14 billion worth of dollars in the last two weeks in a bid to reduce the scarcity of the hard currency in the inter bank market.
The NCC as a regulator of the telecom industry had moved quickly to intervene by reaching out to the CBN convinced of the negative impact the current state of affairs will have on the industry.
NCC was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this may send to potential investors in the Telecom industry.

 

PATRICK ATUANYA & JUMOKE AKIYODE