Etisalat meets Access, Zenith, GTBank to stop takeover bid
Telecoms firm refuses to declare bankruptcy
ABU Dhabi-listed telecoms group Etisalat’s Nigerian affiliate is in talks with local banks to renegotiate the terms of a $1.2 billion loan it took four years ago to expand its network in the country, after missed payments, a senior executive told Reuters. Ibrahim Dikko, vice president for Regulatory Affairs at Etisalat Nigeria, said Etisalat missed payments due to an economic downturn in Nigeria,
a currency devaluation and dollar shortages on the country’s interbank market. “We are in discussions with our bankers and have been for quite a while. They have not taken over the business and we are hoping that we can resolve the issue and find a way to renegotiate terms,” Dikko told Reuters. Emirates Telecommunications Group (Etisalat) owns a 40 percent stake in its Nigerian affiliate, which accounted for around 3.7 percent of the group’s revenue in 2013. Etisalat Nigeria signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650 million loan and fund a modernisation of its network. Dikko said the business performed well last year and it was still in profit at the level of earnings before interest, tax, depreciation and amortisation, while loan repayments had been up to date “until recently.” He said that the company was now looking at “all the options,” which could include converting the loan into naira, but did not want to anticipate the outcome of talks with the lenders. Several other firms took out dollar loans in 2013 to expand at a time Nigeria was seen as an attractive investment prospect. Its economy was growing at seven percent with a stable currency and oil prices were
rising. But now the country has been running short of dollars as oil revenues have fallen along with the price of crude, pushing the economy into its first recession in a quarter of a century. That has weakened the naira which trades at a lower level on the black market than the official interbank rate versus the dollar. The dollar shortages have made it difficult for local companies to get access to foreign currency and as a result some have struggled to repay dollar-denominated debts with several lenders having restructured loans to oil firms. Last month Nigeria’s biggest airline, Arik Air, was placed in receivership by the country’s “bad bank” AMCON for unpaid debts of around 147 billion naira. A consortium of some Nigerian banks was reportedly set to take over Etisalat Nigeria yesterday despite efforts by the Nigerian Communication Commission, NCC, to broker a peaceful resolution between the telecoms firm and the banks over a N541.8bn debt. The consortium, including Guaranty Trust Bank, Access Bank and Zenith Bank, have been having a running battle with the mobile telephone operator over a loan facility totalling $1.72 billion (about N541.8 billion) obtained in 2015, Premium Times had reported. The loan, which involved a foreignbacked guaranty bond, was for Etisalat to finance a major network rehabilitation and expansion of its operational base in Nigeria. But owing to the company’s failure to meet its debt servicing schedule agreed since last year, the three Nigerian banks, prodded by their foreign partners, reported Etisalat to the banking sector regulator, Central Bank of Nigeria, CBN, and its communications sector counterpart, the NCC. While Etisalat blamed its inability to fulfil its obligation to the banks on the current economic recession in Nigeria, the banks said their attempt to recover the loan by all means was fuelled by the pressure from the Asset Management Company of Nigeria, AMCON, demanding immediate cut down on the rate of their non-performing loans. Speaking with the online newspaper Tuesday, senior official of one of the banks said one of the options they have proposed to Etisalat management as a middle way out of the crisis was for it to request for a bankruptcy status. The official, who was said to have pleaded anonymity since he was not authorised to speak on behalf of the consortium, said the bankruptcy option would require having receivership management appointed by the banks to oversee its operations. But, the NCC appeared not to be favourably disposed to the takeover proposal, the source said, as it believes Etisalat was not only a viable going concern, but also willing and able to negotiate its loan servicing.