By Baron Ike
Barely a week Etisalat Nigeria Unveiled its New Board Members, the United Arab Emirate partner to troubled communications company has terminated its management agreement with its Nigerian arm and given the business time to phase out the brand in Nigeria, chief executive of Etisalat International said on Monday, July 10.
Nigerian regulators intervened last week to save Etisalat Nigeria from collapse after talks with its lenders to renegotiate a $1.2 billion loan failed.
All UAE shareholders of Etisalat Nigeria have exited the company and have left the board and management, Hatem Dowidar said in an interview with Reuters.
He said discussions were ongoing with Etisalat Nigeria to provide technical support, adding that it can use the brand for another three-weeks before phasing it out.
The loan facility totalling $1.72 billion (about N541.8 billion) involving a foreign-backed guaranty bond, was for Etisalat to turn around its network and expand its operations in Nigeria. However, the banks claimed that Etisalat had failed to service the debt as agreed since 2016. They subsequently reported Etisalat to the banking sector regulator, the Central Bank of Nigeria (CBN) and its communications sector counterpart, the NCC.
Nigerian Communications Commission (NCC) tried a couple of times to mediate issues between the telecoms company and the banks without results.
New Board members for Etisalat Nigeria were on Tuesday, July 4 unveiled with a former Deputy Governor of the Central Bank of Nigeria (CBN), Joseph Nnanna named as chairman. Nnanna replaced Hakeem Osagie-Bello who resigned voluntarily about a fortnight ago.
Other board members include Boye Olusanya who was appointed as chief executive officer (CEO)to take over from Matthew Willsher, while Funke Ighodaro is to take over from Olawole Obasunloye as chief finance officer (CFO). Also unveiled were Oluseyi Bickersteth and Ken Igbokwe.
The resignation of Bello-Osagie, on Friday, June 30 cleared the coast for intense lobbying and intrigue for his position, and that of the directors who also recently threw in the towel.
Bello-Osagie and his directors left from the telecommunications firm amid festering crisis over indebtedness running into millions of dollars.
Bello-Osagie’s resignation was sequel to the approval of a restructuring plan for Etisalat.
He had planned to quit should the creditor banks make good their threat to take over the affairs of the firm. Now that seems a fait accompli.
Before the new board was unveiled, Armadanews.com had reported that the banks that staked money in the company and whose managements are now likely going to take over the running of Etisalat were putting everything in the mix to position their preferred candidates for the top positions.
They not only want a stake they want a firm control of affairs in the company, said sources.
Etisalat Nigeria had obtained loans of more than $1.2 billion from 13 banks in 2013 – Guaranty Trust Bank, Access Bank, Zenith Bank, UBA, Fidelity Bank and First Bank, among others. to refinance an existing commercial medium term debt of $650m and continue its network rollout across the country.
Some of the bank’s investor relations team told Reuters that Etisalat owed GT Bank N42bn, Access Bank N40bn and Fidelity Bank N17.5bn.
The Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) had intervened to prevent the takeover of the company, but their efforts did not yield the desired result.
The CBN and the NCC were believed to have entered into the fray to avoid a potential problem that could scare foreign investors from the telecoms sector. They also wanted to save huge losses which the liquidation of Etisalat could have caused.
The top regulators had announced a temporary reprieve for Etisalat that initially put out a receivership action against the telecoms firm, giving it some time to hash a deal out that would see the banks get their money back.
Sources close to the intrigues for new directors and chairman of Etisalat told Armadanews.com at the weekend that another flood gate of crisis may be looming going by how the interested banks and their owners are approaching the composition of directors and the chairman.
“We hope the composition of the directors and the new chairman will not breed another trouble for the already troubled telecom company. You know the big names in the banks and their knack for ruthlessness and take all syndrome. That is the fresh fear,” the sources said.
Bello-Osagie’s resignation took immediate effect according to a statement which states that, “Although the chairman had planned to leave immediately the banks made the take-over move, he opted to tarry until a road map for the company was finalised.”
The statement continued: “The timing of the resignation was strategically delayed till now when stakeholders have agreed a plan and come more than a week after Mubadala Development Company directors tendered their resignation.
“The development also reflects Mr. Bello-Osagie’s deep commitment to protecting the interest of all stakeholders.
“It is now expected that Etisalat Nigeria under its new shareholding structure will navigate through its current loan repayment challenge with minimum impact.
“Over the last several months, the chairman has worked extensively with critical stakeholders to prepare clearly articulated strategies and robust road maps that will mitigate the impact of the new shareholding restructuring and realignment on the operations and management of the 4th largest telecoms player in Nigeria.”
With the failure of Etisalat to restructure its loans amounting to N541 billion, the telecommunications firm recently announced a share restructuring which will see the 13 commercial banks take over control of shares in the company.
A statement which Ibrahim Dikko, Vice President, Regulatory and Corporate Affairs of Etisalat, issued had confirmed the development, including that the negotiations with the banks were looking at a number of possible options.
Dikko’s statement said: “Discussions are ongoing 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 parent company in Abu Dhabi, which has already converted its inter-company debts into equity, left it with little incentive to bailout its loss making Nigerian entity. The parent company, which generates 3.7 per cent of its revenues from the Nigerian business, has questioned the rationale of investing more in it and may sell its stake, sources say.
The Nigerian banks were said to have opposed a proposal by Etisalat to convert part of a $1.2bn loan from dollars to naira.
A banker with knowledge of the negotiations told Reuters that the seven-year syndicated loan on which Etisalat Nigeria missed a payment had a Dollar portion of $235m which the telecoms operator wanted to convert into naira to overcome hard currency shortages on Nigeria’s interbank market.
Stakeholders have also expressed concern for the plight of about 2,000 workers on the payroll of Etisalat across Nigeria.
Etisalat Nigeria has 20 million subscribers, according to Nigeria’s telecoms regulator, making it the country’s number four mobile operator; with a 14 per cent market share. South Africa’s MTN has 47 per cent, Globacom 20 per cent and Airtel – a subsidiary of India’s Bharti Airtel 19 per cent.
The UAE’s Etisalat owns 45 per cent of Etisalat Nigeria, while Abu Dhabi’s Mubadala owns 40 per cent of the company. Etisalat Nigeria, however, expressed gratitude to the government, the NCC and the CBN for what it described as, “their patriotic zeal and tireless efforts at ensuring collaborative and productive engagement.”
The new development poses fresh challenge to the newly constituted board, according to stakeholders.