…Firm in talks over missed payment on $1.2bn loan
By Olabisi Olaleye
Three indigenous banks, including Guaranty Trust Bank (GTB), Zenith and Access Banks may have assumed the management of Etisalat Nigeria over unpaid loans of N541 billion in 2015.
Their action followed the failure of the telecommunications firm to liquidate an outstanding N541 billion loan to the banks on account of the current recession that has constrained operators’ financial capacity.
Etisalat, according to industry sources, ought to have paid the loan but unstable dollar price had stopped it because it would mean paying three times higher the original loan.
Ibrahim Dikko, Vice President for Regulatory Affairs at Etisalat Nigeria, said Etisalat missed payments due to an economic downturn in Nigeria, including 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 per cent stake in its Nigerian affiliate, which accounted for around 3.7 per cent of the group’s revenue in 2013.
Etisalat Nigeria signed a $1.2 billion medium-term facility with three Nigerian banks in 2013, which it used to refinance an existing $650 million loan and fund the 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 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.
According to an industry source, Etisalat has approached the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) for their intervention to prevent the takeover of the telco.
The firm which was the fourth entrant in the telecoms industry, disclosed that the economic headwind had made the repayment a little difficult.
“Yes we raised funds from a consortium of banks about two years ago in the country. We have been making conscious efforts to repay the debts and we have indeed repaid part of it. We are engaging with the banks, negotiating with them with a view to coming out with a method of repaying the loan.”
However, Executive Secretary, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbolahan Awonuga, described the takeover news as a mere propaganda since no bank has taken over the telco. He explained that discussions are going back and forth to settle the issue.
Meanwhile, effort to reach Etisalat Corporate Communications Senior Manager, Mrs. Seyi Osundero, proved abortive as at the time of filing this report.
But the Commission’s Public Affairs Director, Mr. Tony Ojobo said there has been no official communication from the telco to the NCC in respect to any takeover threat.
“The commission has requested an official letter stating the issues. NCC will definitely have a way round it in the interest of Nigeria, subscribers and investors.
“NCC does not regulate banks but it will intervene after an official communication is brought and reviewed.”
But for now, Etisalat has not sent in any letter and we cannot act on the basis of phone conversations or what is read online,” he said.