Uncertainty trails Etisalat over debt impasses

The dusts raised by the crisis of confidence over a loan portfolio obtained by Etisalat Communication Nigeria to enhance its operation, may be gradually settling down, but the ripples continue to reverberate across the country, following some grey areas that continue to trail the business deal-turned awry.

Although, it can be said that, Nigerians and stakeholders in the Etisalat Nigeria network have begun to come to terms with the imbroglio that engulfed the telcom’s firm, following the loan of $1.2 billion for network upgrade and expansion, which Etisalat took in 2013 from a consortium of 13 local banks, which include: Zenith Bank, GTBank, FirstBank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank, there remains some critical issues to be addressed.

Things got to a head when Etisalat Nigeria wrote to its creditors citing economic downturn of 2015-2016 and the Naira devaluation, which adversely impacted on the dollar-denominated component of the loan.

This, in deed must have rightly or wrongly, informed the management of the company to be proactive, thus halting the repayment of the loan until it was able to raise more money.

The creditor banks were not so convinced, as they had rejected the request and resolved to take over the firm. They also went further by recoursing to a legal framework, through the prosecution of Etisalat’s directors.

However, their attempt to take over Etisalat was halted by the Nigerian Communications Commission (NCC), the telecoms industry regulator, which insisted that its licence was not transferable without its approval.

NCC’s position was supported by the Central Bank of Nigeria (CBN), which subsequently mediated in the impasse with a view to resolving it and avert a possible negative impact on the Nigerian economy, which is still in recession.

Investigation carried out by The Daily Times revealed that Etisalat had, in 2013, approached a consortium of 13 local banks for a loan of $1.2 billion for network upgrade and expansion and the money was sourced in dollar and naira denominations.

Zenith Bank contributed $262 million and N80 billion respectively which is the highest amount in the loan to Etisalat, while GTBank gave out $138 million and N42 billion, and Access Bank released $131 million and N40 billion.

The other banks’ contributions to Etisalat loan are as follow: UBA $125 million and N38 billion; FirstBank – $79 million and N24 billion; Fidelity Bank – $56 million and N17 billion; Stanbic IBTC – $25 million and N7.5 billion; FCMB – $15 million and N4.5 billion; and Ecobank – $10 million and N3.1 billion.

The bubble,however burst, when bank officials, who financed the importation and purchase of the towers through Huawei of China to help build the infrastructure backbone for Etisalat gathered that CFO of the company had allegedly diverted an estimated $700,000 realised from the sale of its telecommunications’ masts to HIS, in lieu of repaying the loans to the banks.

The Etisalat Group disclosed on the Abu Dhabi Stock Exchange that it had pulled out of Etisalat Nigeria and was transferring 45 per cent of its stake and 25 per cent of its preference shares in its Nigerian subsidiary to United Capital Trustees Limited, the legal representative of the lending banks.

Apart from Etisalat Group, other shareholders of Etisalat Nigeria include Mubadala Development Company, with a 40 per cent stake and Emerging Markets Telecommunications Services (EMTS), representing the Nigerian shareholders, with 15 per cent.

Daily Times gathered that the mass resignations that followed this impasse were an attempt by the directors and senior executives of Etisalat to clear them of criminal and civil liability over the debt impasse, while the banks are bent on restructuring the board and management of the telecoms company to reflect their interest.

Mr. Hakeem Bello Osagie, Chairman, Emerging Markets Telecommunication Services Limited, doing business as Etisalat Nigeria, against the backdrop of the heat generated over the company’ raging challenge, resigned his appointment, following the approval of a restructuring plan for the telecommunications firm.

Thereafter, the company’s chief executive officer (CEO), Mr. Matthew Willsher, and chief financial officer (CFO), Mr. Wole Obasunloye, also resigned their appointments.

It will be recalled that The Daily Times, on Wednesday, July 5, invoked the FOI and wrote to the CBN, requesting why the National Assembly was silent over the teleco issue saying that that it could cause a national embarrassment, if not addressed.

The House of Representative has risen to the occasion, through Saheed Akinade-Fijabi, Chairman, House Committee on Telecommunications after the Daily Times’ request; and following its intervention, the House asked the NCC to immediately conduct financial forensics on all telecom operators in the country to determine their health status.

Akinade-Fijabi issued the directive in Abuja after an emergency meeting with the management of the NCC, led by Mr. Sunday Dare, executive commissioner (Stakeholder Management).

Fijabi said the action became necessary in order to determine the true situation of things in the operations of the telecoms operators in the country, to prevent further loss of revenue to the federal government and loss of jobs by Nigerians in the sector.

Daily Times gathered that the order from the House of Reps is coming on the heels of what befell Etisalat Nigeria, as telecoms’ operators in the country once seen as flourishing, are today battling to survive due to unfavourable economic policies in the country.

Daily Times also gathered that the situation has forced some of them to rationalize staff, with long-term implications for the country’s Gross Domestic Product, GDP; some have moved their Network Operating Centres (NOCs) to India; while some are faced with difficulties in meeting with their creditor obligations.

It would also be recalled that the challenges the telecommunications operators are facing today is how it started with Code Division Multiple Access (CDMA) operators which cumulated in distress of all the operators in the subsector of the industry.

When it started, stakeholders in the CDMA cried out to government and NCC for intervention in order to save the operators of imminent distress to no avail.

Reacting to this development, Chief Deolu Ogunbanjo, president ‎National President at National Association of Telecoms Subscribers (NATCOMS) in a telephone interview with our correspondent, said, “we must appreciate the fact that the telecom industry has developed tremendously since inception from the early days of Econet Nigeria; and what exactly forced the company to leave Nigeria.

“It got us thinking about how many times we’ve seen the telco change its identity and management. How long before Celtel/Zain/Airtel changes its name.”

Ogunbanjo said that the appointment of the CBN Deputy Governor, Dr Joseph Nnana, portends a healthy development for Etisalat, because there was alleged mismanagement of fund after the telecom obtained loans from 13 banks.

He said,“We need to allow them to stabilize the teleco since the shareholders, especially Mubadala Development Company are pulling out back to back having transferred 45 per cent of its stake and 25 per cent of its preference shares in its Nigerian subsidiary to United Capital Trustees Limited, the legal representative of the lending banks.

“The issue of fraud does not arise because the management made some payment before the creditors disagreed with the payment schedule they were asking for. To my mind, it is an issue of mismanagement of the fund and not an issue of fraud to warrant the EFCC coming in.

“It is the issue of debt services. There is the need for the new management to regularize their finances and to return Etisalat to the level of profitability.”

He advised the new management to reposition Etisalat by repackaging their product, data plans and promo to compete favourably with other networks.

“The new board has a task to return Etisalat to its vibrancy in order to maintain existing subscribers and attract new subscribers,” he said.

Commenting on the issue in an in exclusive telephone interview with Engr Lanre Ajayi, past immediate president of Association of Telecoms Companies of Nigeria (ATCON), and CEO Pinnet Informatics, told our correspondent that, “It is a regrettable situation, undesirable to the extent that the operator financially is not able to meet up its obligation. And it is a pointer to the fact that all is not well with the industry.

“It is also a pointer to the perception that the industry is a cash cow. It is a very wrong perception. It is not a very welcome development. The new management is already in place and the way forward is that it should be managed properly with the right services.”

He said, “All I can say is that the environment is hostile and we are operating in a very difficult terrain. There are other operators that are equally challenged. A situation where operators cannot access foreign exchange to meet up their obligations is not healthy for the operation of the telecom industry.”

However, Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, told The Daily Times that he was happy with the reconstitution of the Etisalat’s board and how the financial crisis was resolved in the interest of all stakeholders.

Adebayo said that it is too early to comment on the capability of reconstituted board members, but added that ALTON has confidence in the managerial capacity of Olusanya as the newly appointed managing director and chief executive due to his long and outstanding experience in the telecoms industry.

He disclosed that Olusanya had operated in the management of Econet Wireless and Celtel that was later transformed to Airtel Nigeria.

“Our interest as an association is in the issue that has been resolved amicably in the interest of all stakeholders involved; and we will continue to support the management of Etisalat and its new board members,” he said.

However, the President of the ATCON, Mr. OlusolaTeniola, also said that ATCON supports the choice of Olusanya as the new Etisalat CEO, adding that he is experienced in the telecoms industry having held the positions of Deputy Managing Director of Celtel and Managing Director of Dancom, a subsidiary of Dangote Group.

According to him, Boye Olusanya will bring his knowledge of the fiber transmission and mobile services segment of the industry and his transformative experience in this area to bear in the industry.

“ATCON welcomes him back into the fold and very much look forward to his plans for the future of Etisalat post-transition and his perspective on the industry as a whole; and a way forward with respect to the way and manner the industry structures capital that funds and supports the much needed network infrastructure roll-out envisaged to continue to grow this industry,” he added.

All efforts made to speak with the spokesperson of CBN, Mr. Isaac Okoroafor with the appointment of a CBN Deputy Governor, as the chairman of Etisalat, proved abortive, as he did not pick his calls or response to text message sent to his mobile phone, as at press time.