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Surviving the current tough business environment in Nigeria is a herculean task, even for the biggest of brands. Recent history is littered with relics of businesses that were felled by one blow. This defines a fair, real-world and accurate perspective to the loan crisis that Etisalat Nigeria has been wadung through.
Etisalat Nigeria has been in the public eye over the renegotiating of the terms of a $1.2 billion loan with a consortium of 13 banks. There are concerns that the takeover might lead to job losses and more setbacks for the company, even though some industry watchers have noted that, despite the impression in some quarters that the telco would fold up, there is still a lot of hope.
“The reality shows that the business still stands, strong, resilient and is so valuable that lenders and investors are courting it, in spite of the knotty loan liability,” said a tech insider.
According to Barry Otokhine, the loan was acquired in 2013 as a medium-term, seven-year facility to fund expansion of the network. Following the economic downturn of 2015, naira slumping from about N197 to a dollar to about N500 to a dollar in early 2017, “This negatively impacted on the value of the dollar-denominated loan; meaning that the loan grew to about thrice its naira value, and it was complicated by restricted access to foreign exchange/dollars.”
In spite of this challenge, Etisalat continued to service the loan up until February 2017, when discussions with the banks regarding the repayment restructuring commenced. The $1.2 billion loan has been repaid up to 42 per cent. The outstanding loan sum to the consortium stands at $227 million and N113 billion, a total of about $574 million, if the naira portion is converted to US dollars.
While negotiations have continued considering options, including a restructuring of the shareholding/change in ownership, the major change that has occurred so far is the decision by Etisalat Group and Mubadala Development Company, both institution investors from the UAE, transferring their shares in the company to an appointed security trustee of the banks.
A source close to the company, who simply identified himself as Ben, said, “As it is, what has happened is a ‘change in ownership’ not a receivership, bankruptcy or winding up. The change has not affected operations of the company. It has continued to run, offering subscribers top quality service.”
All stakeholders in the negotiation, including the banks, the Nigerian Communications Commission and the Central Bank of Nigeria, have shown support for the unhindered operations of the business and efforts are on to ensure that day-to-day operations are not affected and subscribers’ experience is not altered.
The telecoms regulator also pledged that it would do all within its regulatory power to ensure that Etisalat’s 21 million subscribers continue to enjoy the services provided by the operator.
“The NCC 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,” the source said.
Director Public Affairs of the NCC, Mr. Tony Ojobo, disclosed that the commission was aware of the indebtedness of Etisalat to the consortium of banks. And, in conjunction with the CBN, it mediated by holding meetings with the banks, Etisalat and other stakeholders with a view to positive resolution. However, the meetings did not yield the desired results.
Moreover, the NCC has drawn the attention of the banks to provisions of the Nigerian Communications Act (NCA) 2003 Section 38:
“Sub-section one: 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 two: A licensee shall at all times comply by the terms and conditions of the license and the provisions of this Act and its subsidiary legislation.”
However, something will change. Etisalat Nigeria will undergo a transition period while it works with the banks to secure new investors. With new investors, there is a possibility of a change in brand, which might become clearer once the restructuring has been concluded.
Meanwhile, president, Association of Telecommunications Companies of Nigeria, Olusola Teniola, has espressed regrets the turn of events.
He said, “It is unfortunate that Etisalat found itself in this situation, when we thought they would have an amicable outcome. It was more of a takeover led by Access Bank. We all know from history that banks running telecoms operations doesn’t end well but in collapse in operations.
“ATCON is praying that the over 20 million subscribers are protected and the stakeholders understand that customer is king.”
The impact on the country and industry can be minimised if the regulator steps in and guide the banks in the best way to run the operations of the company so that there won’t be migration of subscribers. Courteous and customer service should be paramount. It should help to ensure that the subscribers are confident and that Etisalat is a growing concern.What we don’t want to happen is when consumers start expressing concern that all is not well and they start reducing in numbers or announcement that may jeopardise recharge credits and have huge impact on the revenue of company and even on the GDP of the economy as telecoms currently has contributed nine per cent to the economy. If there is any impact on Etisalat, it would have ripple effect that may not only be astronomical not only to the supply chain but all the industry and all who depend on the network to run critical networks, banking systems, and other online systems that we have in today’s space”.
However, while all these are ongoing, Etisalat Nigeria has been trudging on; improving the quality of its service to subscribers. It has in the past few months launched its 4G LTE in Lagos, Abuja, Kano and Port Harcourt significantly improving the quality of its network in those cities, with other cities lined up.
Meanwhile, Exotix Capital, a leading frontier and emerging markets investment firm based in the United Kingdom, has said the impact of the medium-term seven-year facility secured by Etisalat Nigeria from the consortium of 13 banks is manageable.The firm in its most recent research report entitled, ‘Nigeria Banks’, released last week, said the impact of the loan out was “modest”.
Holistically, it is a win for all stakeholders and the Nigeria economy that the telco has remained resilient and afloat as a leading mobile telecommunications network operator in Nigeria. At the moment, it’s almost storm over for the telco and the future looks pretty bright.

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