Home Business CBN Wades into EtisalatN541.8b Debt Brouhaha

CBN Wades into EtisalatN541.8b Debt Brouhaha

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By Chinyere Aruogu

The Central Bank of Nigeria (CBN) and Nigeria Communications Commission (NCC) have waded into the planned takeover of Etisalat by a consortium of foreign and local banks over huge indebtedness ascribed to the telecommunication outfit. NCC intervened earlier but could not achieve much.

They did after a meeting Thursday, March 9 afternoon in Abuja between the Executive Vice Chairman of NCC, Umar Danbatta and the CBN Governor and his team.

Thereafter, a decision was reached to intervene in the loan issue between Etisalat Nigeria and the banks.

The meeting held at the CBN headquarters in Abuja at the instance of the financial regulator of NCC, was aimed at pursuing further deliberation on how best to stave off the attempt by the banks to take over Etisalat.

Both the CBN and NCC agreed at the end of the meeting to invite Etisalat management and the banks to a meeting tomorrow, Friday, March 10 for further discussion and an amicable resolution.

Tony Ojobo, Director, Public Affairs Nigerian Communications Commission in a statement on Thursday, March 9 said: “The NCC as a regulator of the telecom industry had moved quickly to intervene earlier in the week by reaching out to the CBN convinced of the negative impact such a bank take over 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.”

It was reported on Wednesday, March 8 that the failure of Etisalat to liquidate its N541.8 billion indebtedness to a consortium of foreign and local banks including Zenith, GTB and Assess may have put the survival of the communication outfit in jeopardy. The banks want a takeover of the running of the affairs of Etisalat by receivers as urgently as possible.

The consortium of foreign and Nigerian banks, including Guaranty Trust Bank, Access Bank, and Zenith Bank, have been having a running battle with the mobile telephone operator over a loan of $1.72 billion (about N541.8 billion) collected in 2015.

What makes Etisalat’s case worse was the failure of the Nigerian Communication Commission (NCC) to broker a deal, peaceful enough between the banks and the telecommunication.

The NCC waded to save Etisalat because it believes the company is viable and still a going concern, and in a position to renegotiate its indebtedness. But the proposal of the NCC did not go down well with the consortium of banks which was working hard to get NCC’s approval for the takeover.

Armadanews got it on good authority that the banks resolved on Wednesday, March 8 to wade in to recover their money in view of the biting economic recession affecting their own businesses.

How the consortium of banks want to go about recovering their money is yet to be communicated publicly because AMCON said they are not on the radar yet.

Sources said the banks are proposing the option of bankruptcy status to Etisalat so that receivers would be appointed by the banks to oversee its workings.

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.

However, following the failure of the company to meet its debt servicing schedule agreed since 2016, the three Nigerian banks, prodded by their foreign partners, reported Etisalat to banking sector regulator, the Central Bank of Nigeria (CBN) and its communications sector counterpart, the NCC.

Although Etisalat blamed its inability to fulfill its obligation to the banks on the current economic recession in Nigeria, the banks said their attempt to recover the loan, by all means, was fuelled by the pressure from the Asset Management Company of Nigeria (AMCON) demanding immediate cut down on the rate of their non-performing loans.

Etisalat has more than 20 million subscriber base as at January this year. It came into operation in 2009 and retains the status of the fourth largest telecom provider by the rating of NCC.

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