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13 banks force foreign investors out of Etisalat

…Move to formally take over the telecom firm
…NCC cautions on take-over

By Emeka Anaeto, Business Editor & Prince Osuagwu

LAGOS—Pressures from 13 Nigerian banks and their overseas partners have forced the exit of the foreign investors in Etisalat Nigeria, just as the creditor banks move to formally take over the telecom company’s management.

But Etisalat Nigeria said negotiation with the banks on outstanding indebtedness was still on-going as at yesterday, while a major equity restructuring gets underway.

The Nigerian banks in the USD1.7 billion debt web include Access Bank, Guaranty Trust Bank, FirstBank, Zenith Bank, Union Bank, United Bank for Africa,UBA, and Ecobank.

Others are FCMB, Stanbic IBTC, Fidelity Bank, Keystone Bank, FSDH Merchant Bank and Mainstreet Bank.

The banks are expected to assume management of the company to recover their monies, following failure of the debt management and restructuring earlier worked out this year.

This failure, Vanguard learned, had prompted the foreign shareholder to announce a pull out, yesterday, with the Nigerian company, describing the pull out as the first step towards a  full equity restructuring.

The consortium, comprising Nigerian and foreign banks, said it got the approval to take over the management of Etisalat Nigeria, effective June 15, but decided to extend enforcement of the order to June 23, 2017 after which Emerging Markets Telecommunications Services, EMTS, may have completed transfer of the 100 percent of the company’s shares in Etisalat to the United Capital Trustees Limited, the legal representative of the consortium of banks.

The takeover followed the collapse of the efforts by EMTS to reach agreement with the banks on restructuring plan for the $1.72 billion (about N541.8 billion) debt.

Etisalat has been under pressure since 2016, following the demand notice for the recovery of loan facility it obtained from the consortium in 2015.

The loan, which the telecom company obtained to finance a major network rehabilitation and expansion of its operational base in Nigeria, involved a foreign-backed guaranty bond.

Etisalat said it was not able to meet its debt servicing obligations due to stringent forex policy and recession in Nigeria but appealed for a restructuring plan.

However, the Nigerian banks, prodded by their foreign partners, threatened to take over the company and its assets across the country.

But the intervention of the telecom sector regulator, Nigerian Communications Commission, NCC, and its financial sector counterpart, Central Bank of Nigeria, CBN, persuaded the banks to rethink their threat and give Etisalat a chance to renegotiate the loan’s repayment schedule.

But, yesterday morning, Etisalat of the UAE, which currently holds 45 per cent of Etisalat Nigeria announced at the Abu Dhabi Stock Exchange that attempts to stave off the company’s takeover have proved abortive.

Both Chief Financial Officer of Etisalat Group, Serkan Okandan and Vice President, Regulatory & Corporate Affairs, Etisalat Nigeria Ibrahim Dikko, confirmed that both parties have reached a deal to commence transfer of ownership to the banks by 5.00pm on Friday June 23, 2017.

Dikko in a statement, yesterday, admitted that EMTS, the local investment group that owns Etisalat Nigeria, has kicked off stage one of restructuring of changes to its shareholding.

NCC cautions on takeover

Meanwhile, the telecom sector regulator, the NCC, has cautioned the banks to acquaint themselves of the provisions of the Nigerian Communications Act, before celebrating the takeover.

The commission said although it was aware of Etisalat’s indebtedness to the consortium of banks, it, in conjunction with the CBN, held several meetings with the banks, Etisalat and other stakeholders with a view to finding a resolution, it was regrettable the meetings did not yield the desired results.

Director Public Affairs of NCC, Mr Tony Ojobo, in a statement, said: “The commission has drawn the attention of the banks to provisions of the Nigerian Communications Act (NCA) 2003 Section 38:

Sub section 1: The grant of a license shall be personal to the licensee and the license shall not be operated by, assigned, sub licensed or transferred to another party unless the prior written approval of the commission has been granted;

Sub section 2:  A licensee shall at all times comply by the terms and condition of the license and the provision of this act and its subsidiary legislation.

“The NCC wishes to reassure the over 21 million Etisalat subscribers that it will do all within its regulatory power to ensure that Etisalat subscribers continue to enjoy the services provided by the operator.

The Commission has taken proactive steps to cushion the impact of the takeover, this is without prejudice to the ongoing effort between Etisalat and the banks toward negotiated settlement.


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