CBN, 13 Banks to Meet Today on Etisalat’s N377bn Debt : NCC

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The Nigerian Communications Commission (NCC) yesterday said that the Central Bank of Nigeria (CBN) and the 13 Nigerian banks with exposure to Etisalat to the tune of N377 billion ($1.2 billion) would meet today to deliberate on how to restructure the telcos’ debts.

Mr. Tony Ojobo, the Director of Public Affairs of the commission, in a statement issued in Abuja, said CBN and the management of NCC, led by its Executive Vice Chairman (EVC), Prof. Umar Danbatta, met yesterday to find an amicable resolution to the N377 billion owed by the telecom operator to the 13 banks.

According to the statement, the meeting which was held at the CBN headquarters in Abuja, was convened by the central bank at the instance of NCC, to further deliberate on how best to stave off the attempt by the banks to takeover Etisalat.

The statement read: “At the end of the meeting, the EVC said CBN agreed to invite Etisalat’s management and the banks to a meeting tomorrow (Friday) towards finding an amicable resolution.”

According to Ojobo, NCC, as regulator of the telecommunications industry, moved quickly to intervene earlier in the week by reaching out to the CBN and convinced the latter of the negative impact such a takeover by the banks would have on the industry.

He said the commission was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this may send to potential investors in the telecom industry.

The Vice President for Regulatory Affairs at Etisalat, Mr. Ibrahim Dikko said on Wednesday that the company missed payments to the banks due to the economic downturn in the country, a currency devaluation and dollar shortages.

Etisalat also confirmed yesterday that the company was still negotiating with its creditors on new modalities to refinance the $1.2 billion loan it took in 2013 for network upgrade and expansion.

The telecom company dismissed as untrue any plans by its creditors to takeover its management, explaining that discussions between it and its creditors were ongoing and a joint statement would be issued to the public as soon as discussions for new method of refinancing the loans are concluded.

Dikko who made the clarification, said: “I am in my office in Abuja and we do not have any presence of our creditors to takeover our telecoms business because we are indebted to them.

“Yes we are indebted, but we have commenced payment, and we only stopped the flow of repayment a few months ago as a result of the devaluation of the naira and scarcity of dollars.”

According to Dikko, Etisalat had invested over $2 billion in its Nigerian operations, which was obtained from its parent company, Mubadala, and its shareholders, but it needed additional money to expand its business and provide value added services to its growing customer base, hence it consulted with a consortium of 13 local banks to raise the additional $1.2 billon as a loan.

“In refinancing the loan, Etisalat was meant to pay a certain percentage of the loan with interest on a quarterly basis, and it has been meeting that obligation until recently when it started defaulting due to devaluation of the naira, dollar scarcity, and the economic recession,” Dikko restated.

He said Etisalat was still in full control of its operations and has commenced fresh discussions with the banks to negotiate a new mode of refinancing the loan.

“The situation is not affecting our service delivery and we will continue to provide quality services to our customers,” Dikko said.

It also emerged yesterday that Etisalat owes N40 billion ($131 million) to one of the lenders, Access Bank Plc.

The Chief Executive Officer, Access Bank, Mr. Herbert Wigwe said the loan talks were triggered 10-days ago when the company asked lenders to “stand still” on the loan for it to review its operations.

He also said that Etisalat Nigeria’s parent Emirates Telecommunications Group had converted a loan to the Nigerian company into shares to free up cashflows and was being asked to inject more equity capital.

“Banks are saying we would need an equity injection or commitment to support the business. That is being discussed,” Reuters quoted Wigwe to have told an analysts’ conference call when asked about Access Bank’s loan book.

He said the bank was monitoring the level of non-performing loans on its books but the Etisalat loan was classified as “performing” and saw no need to make a provision.

Etisalat Nigeria accounted for around 3.7 per cent of the UAE-based group’s revenue in 2013.

With a subscriber base of 20.5 million, Etisalat has a mobile market share of 13.3 per cent in Nigeria, behind South Africa’s MTN’s, privately held Globacom and Airtel, a subsidiary of India’s Bharti Airtel, according to NCC.

It 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.

Wigwe said the discussion was “difficult” and the Emirates Telecommunications Group, which hitherto owned 40 per cent of Etisalat Nigeria, had questioned why it needed to import more capital into Nigeria at a time when the economy was facing its first recession in a quarter of a century.

Other lenders on the loan deal include: Zenith Bank, GTBank, First Bank, UBA, Fidelity Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

Etisalat is the fourth entrant into the Nigerian telecoms space, having rolled out its commercial service in 2008.

The telecom firm has in recent years gained the confidence of its subscribers, especially among the youths, because of its value added services and innovative products that are targeted at a younger generation of phone and data users.

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