Etisalat losses 45% stake to lending bankers, over $1.2 billion debt


The ownership structure of Etisalat Nigeria is now set change as Lending bankers has taken over telecommunications company and subsequently announced changes in the shareholding structure of the company.

Access Bank Plc and other Nigerian banks eventually took over the management of the company, effective June 15 after a protracted $1.2 billion debt impasse. Other lenders in the loan deal are Zenith Bank, GTBank, First Bank, UBA, Fidelity Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

A source privy to the arrangement said that the affected banks had requested a new management of the telecoms firm.

While it is certain that there will be some job losses, (may not be in the immediate), and possible management changes, there are also worries in the industry about the fate of the 20 million customers on Etisalat’s network in Nigeria.

It was learnt that Etisalat’s employees at different cadres were seen going about their normal duties at the major offices of the firm, including its Banana Island Head Office in Lagos yesterday.

Indeed, the takeover followed the collapse of efforts by Emerging Markets Telecommunications Services (EMTS), promoted by a former Chairman of UBA, Hakeem Bello-Osagie, to reach an agreement with the banks restructuring of the $1.2 billion debt.

EMTS Holding BV, established in the Netherlands, has up to June 23 to complete the transfer of 100 per cent of the company’s shares in Etisalat to the United Capital Trustees Limited, the legal representative of the consortium of banks.

Confirming the development in a statement signed by Etisalat Nigeria’s Vice President, Regulatory & Corporate Affairs, Ibrahim Dikko, the company said the operations and services to the subscribers remained normal and would in no way be affected.

“We continue to deliver quality services to our subscribers. We will continue to tap into the rich, creative and innovative resources within our workforce to build a stronger business upon the stable foundation we have laid in our nine years of operations.”

Dikko said Etisalat Nigeria had commenced its restructuring with changes to its shareholding. “As it had earlier stated in a release, the negotiations with the consortium of lenders are considering a number of possible options.

“Etisalat Nigeria can now confirm the first stage of this has begun with a change in shareholding which was announced to the Abu Dhabi Stock Exchange this morning (yesterday),” the statement said.

Etisalat Group, the parent company of Etisalat Nigeria, announced the takeover yesterday in a filing to the Abu Dhabi Securities Exchange in Abu Dhabi, United Arab Emirate.

The filing, with reference number Ho/GCFO/152/85, and dated June 20, 2017 signed by Etisalat Group Chief Financial Officer, Serkan Okandan, said efforts by EMTS to restructure the repayment of the syndicated loan by a consortium of banks to Etisalat Nigeria collapsed.

“Further to our announcement dated February 12, 2017, Emirates Telecommunications Group Company PJSC, ‘Etisalat Group’ would like to inform you that Emerging Markets Telecommunications Services Limited ‘EMTS’ established in Nigeria and an associate of Etisalat Group with effective ownership of 45 per cent and 25 per cent ordinary and preference shares respectively, defaulted on a facility agreement with a syndicate of Nigerian banks (EMTS Lenders).

“Subsequently, discussions between EMTS and the EMTS Lenders did not produce an agreement on a debt restructuring plan.

“Accordingly, the company received a default and security Enforcement Notice on 9 June 2017 requesting EMTS Holding BV (EMTS BV) established in the Netherlands, and through which Etisalat Group holds its interest in the company), requiring EMTS BV to transfer 100 per cent of its shares in the company to the United Capital Trustees Limited (‘the Security Trustee’) of the EMTS Lenders by 15 June 2017.

“Subsequently the EMTS Lenders extended the deadline for the share transfer to 5.00 pm Lagos time on 23 June 2017,” the filing said.

Expressing regret over the matter, the President of the Association of Telecommunications Companies of Nigeria (ATCON), Olushola Teniola, said the focus on consumers and their ultimate choice should be paramount in the minds of all stakeholders during this difficult period for the shareholders of Etisalat.

Teniola affirmed that the ‘customer is king’ and that quality of service is key to the future shape and size of Etisalat.

“Investors, both domestic and international, will be watching very closely how our regulator is able to manage any fallout and the precedent this sets for the industry.

“ATCON has called for and reiterates a call for a competition czar to be created to deal with such issues raised over the last three months concerning takeovers, mergers and acquisitions in a sector that is critical to the future of our economy.”

A telecoms expert, Kehinde Aluko, said that there shouldn’t be a problem with managing the 20 million subscribers, as the onus rests on the new management to handle the company better and progressively.

According to the Chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, the group is yet to receive a formal notification .

Meanwhile, the Nigerian Communications Commission (NCC) has assured subscribers of network integrity of Etisalat.

In a statement by its Director of Public Affairs, Tony Ojobo, NCC said the commission was aware of the indebtedness of Etisalat to the consortium of banks, it mediated by holding several meetings with the banks, the telecoms company and other stakeholders with a view to finding a resolution. “Regrettably, these meetings did not yield the desired results,” it said.

The commission promised to do all within its regulatory power to ensure that subscribers continue to enjoy the services provided by the operator.

The Commission said it had taken proactive steps to cushion the impact of the takeover, this is without prejudice to the ongoing effort between Etisalat and the banks towards a negotiated settlement.

The Chairman, Association of Licensed Telecommunications Operators of Nigeria, Gbenga Adebayo, said the body had yet to receive formal notification of the development from its member, Etisalat.

“However, we hope that the parties can resolve the matter amicably. Despite the current situation, there is still room for negotiation. We believe strongly that the matter will not affect Etisalat’s subscribers in the country,” he stated.

The loan that has proved so troubling for Etisalat Nigeria is a seven-year facility agreed with 13 local banks in 2013 to refinance a $650m loan and fund expansion of its network.

The Abu Dhabi state-investment fund Mubadala, the second-biggest shareholder in Etisalat Nigeria, declined to comment


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