Etisalat terminates management agreement with Nigeria

Etisalat Telecoms group has finally terminated the management agreement it entered with its embattled Nigerian arm.

Etisalat Nigeria, which is still smarting from a debt overhang amounting to $1.2 billion it owed a consortium of 13 banks, led by Access Bank Plc, has been given few weeks within which the group will exit Nigeria.

This, is, despite the intervention of the Central Bank of Nigeria and the Nigerian Communication Commission, sector’s regulator, to avert a long-term negative effects on the economy. and the setting up of a new board to handle the firm.

This latest move, observers had said, could cause a long-term distortion in the Nigerian economy, including job losses, and a strain on the nation’s Gross Domestic Product.

An indication to pull out of its Nigerian affiliate, was given by the Chief Executive of Etisalat International, Hatem Dowidar, who informed Reuter that the company, with a 45 per cent stake in the Nigerian business, is transferring its shares to a loan trustee after the talks had failed.

Dowidar said that all UAE shareholders of Etisalat Nigeria, including state-owned investment fund, Mubadala, had exited the company and left the board and management.

He said discussions were ongoing with Etisalat Nigeria to provide technical support, adding that it could continue to use the brand for another three weeks before phasing it out.

“There’s a new board and we are not part of that company. We have sent our termination letter for the management agreement,” Dowidar said.

It will be recalled that Etisalat Nigeria took out a $1.2 billion loan with 13 local lenders in 2013 to refinance an existing loan and fund expansion, but could not repay the loan four years later.

When asked if the company will return to the country anytime soon, Dowidar said, “the train has left the station on that one. Being in that market as an investor … are we willing to risk more money compared to the reward for the long-term?”

“Etisalat is among the top two in markets, such as the UAE, Saudi Arabia, Morocco, Egypt and Afghanistan.

“(Nigerian) lenders may try to continue to operate the company until they find a buyer (or) they may merge the company with the existing players in Nigeria, he said, adding that it was tough to say what lenders would do.”

He said, “The brand agreement in either of these two scenarios won’t be a long-term thing, so we take out the brand; in the long-term Etisalat won’t be in Nigeria.”