$1.72 billion debt creates Etisalat Nigeria takeover drama

Three Nigerian banks are set to take over telecommunications firm Etisalat over unpaid N541.8billion debt.

Three Nigerian banks are set to take over telecommunications firm Etisalat over unpaid N541.8billion debt.
Etisalat has amounted $1.72 billion in debt.

According to reports from the Premium Times three Nigerian banks (Guaranty Trust Bank, Access Bank and Zenith Bank) attempted to take over operations of telecommunications firm Etisalat on Wednesday 8th of January due to the company’s unpaid debts which amount to N541.8 billion ($1.72 billion). A separate report states that The Central Bank of Nigeria (CBN), and the Nigerian Communications Commission (NCC), last Thursday, moved to stop the consortium of Nigerian banks from taking over the mobile telecoms firm.

The loan, which involved a foreign-backed guaranty bond, was meant to be used by Etisalat to finance a major network rehabilitation program and expansion of its operational base in Nigeria. The company however failed to meet its debt servicing schedule. This led the three Nigerian banks to lay a complaint with banking sector regulator, the Central Bank of Nigeria and its communications sector counterpart, the NCC.

Etisalat blames their inability to pay back their loan on the poor economic climate that is currently plaguing Nigeria. A senior official of one of the banks reportedly said that the banks offered Nigeria’s fourth largest telecommunications company a solution, which would require them to file for bankruptcy and allow the banks to oversee the firm’s operations. This proposal was rejected.

Vanguard  reported that The Director of Public Affairs of NCC, Mr Tony Ojobo said in a statement issued on Thursday in Abuja that, “After a meeting on Thursday afternoon in Abuja between the Executive Vice Chairman of NCC, Prof. Umar Danbatta and the CBN Governor, Mr Godwin Emefiele and his team, a decision was reached to intervene in the loan issue between Etisalat Nigeria and a consortium of commercial banks.”

Ojobo also expressed his concern over the 20 million Etisalat subscribers, who could be effected by the takeover, as well as the message that the takeover would send to potential investors in the telecoms industry in Nigeria.
Ojobo added that “At the end of the meeting, the CBN agreed to invite Etisalat management and the banks to a meeting tomorrow, Friday 10th of March, toward finding an amicable resolution,’’

The NCC are reportedly not in favour of the takeover bid by the banks because they still see Etisalat as a strong player in the industry.

After the news broke about the apossible takeover, the Head of Public Relations, Etisalat Nigeria, Ms Oluseyi Osuntedo, dispelled the rumours that banks had taken over the company. Osuntedo said that “Discussions are going on; nobody is taking up the company. It is not true that we are being picketed, whoever gave the information is not telling the truth.”

 

Staff Writer