â€¢ Telco announces new shareholding as Abu Dhabi parent pulls out
Citing the Nigerian Communications Act (NCA), the Nigerian Communications Commission (NCC) Tuesday stepped into the crisis that has enveloped the countryâ€™s fourth largest network operator, Etisalat, reminding the consortium of banks that the telecoms firm is indebted to, to the tune of $1.2 million that it cannot take over Etisalatâ€™s operating licence without its approval.
A consortium of 13 Nigerian lenders led by Access Bank Plc moved to make good an earlier threat to take over Etisalat by Friday, following its inability to meet the payment terms on a $1.2 billion loan that it took in 2013 for network upgrade and expansion.
The banks, comprising Access Bank, Zenith Bank Plc, Guaranty Trust Bank Plc, FirstBank Limited, Fidelity Bank Plc, First City Monument Bank (FCMB), Stanbic IBTC, EcoBank, United Bank for Africa (UBA) Plc and Union Bank of Nigeria Plc, among others, said they would take over Etisalatâ€™s operations through its legal representative, United Capital Trustees.
Emirates Telecommunications Group Company (Etisalat Group), Abu Dhabi, which holds a 45 per cent stake in the Nigerian subsidiary also announced Tuesday at the Abu Dhabi Stock Exchange that attempts to stave off the companyâ€™s takeover had proved abortive and that the lender banks were closing in.
Serkan Okandan, Chief Financial Officer of Etisalat Group, who made the announcement on behalf of the UAE group and operators of Etisalat Nigeria, said both parties had reached a deal to commence the transfer of ownership to the banks by 5 p.m. on Friday, a development that immediately caused ripples in the telecoms sector.
However, the NCC in a statement Tuesday evening by its spokesman, Mr. Tony Ojobo, drew the attention of the lenders to the provisions of the NCA, which provides that the issuance of a licence shall be personal to the licensee and is not transferable to a third party without the written approval of the commission.
Section 38(1) of the Act states: â€œThe grant of a licence shall be personal to the licensee and the licence shall not be operated by, assigned, sub-licensed or transferred to another party unless the prior written approval of the commission has been granted.â€
Sub-section 2 states: â€œA licensee shall at all times comply by the terms and condition of the licence and the provision of this Act and its subsidiary legislation.â€
The telecoms industry regulator, in the statement, also assured the 21 million subscribers of Etisalat of the integrity of its network, adding that it would do all within its powers to ensure that they continue to enjoy the services provided by the operator.
Ojobo said: â€œThe attention of the commission has been drawn to the planned takeover of Etisalat by a consortium of banks.
â€œAs a result of this planned action, the commission wishes to state that it is aware of the indebtedness of Etisalat to the consortium of banks.
â€œIn conjunction with the Central Bank of Nigeria (CBN), we mediated by holding several meetings with the banks, Etisalat and other stakeholders with a view to finding a resolution. Regrettably these meetings did not yield the desired results.
â€œThe NCC wishes to reassure the over 21 million Etisalat subscribers that it will do all within its regulatory power to ensure that Etisalat subscribers continue to enjoy the services provided by the operator.
â€œThe commission has 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.
â€œIn view of the recent development, NCC wishes to reassure all stakeholders in the telecommunications sector, and in particular the subscribers on the Etisalat network that the commission will ensure that the integrity of Etisalat Network is not compromised.
â€œAccordingly, the commission has drawn the attention of the banks to provisions of the Nigerian Communications Act (NCA) 2003 Section 38: Sub section 1 â€“ The grant of a licence shall be personal to the licensee and the licence shall not be operated by, assigned, sub licensed or transferred to another party unless the prior written approval of the commission has been granted;
â€œSub section 2 â€“ A licensee shall at all times comply by the terms and condition of the licence and the provision of this act and its subsidiary legislation.â€
Ojobo reiterated the commitment of the NCC to ensure that Etisalatâ€™s subscribers continue to enjoy the services provided by the operator, while the banks and the company work at resolving the issues.
The action of the banks came on the heels of the collapsed negotiations between them and the three core investors in Etisalat Nigeria â€“ Mubadala Development Company, UAE; Emirates Telecommunications Group Company (Etisalat Group), Abu Dhabi; and Emerging Markets Telecommunications Services (EMTS), the local arm of Etisalat Nigeria.
Mubadala owns 40 per cent of the equity in Etisalat Nigeria, Emirates Telecoms Group holds 45 per cent, while EMTS holds 15 per cent.
Of the three major investors, only Etisalat Group, Abu Dhabi, has announced its intention to pull out of Etisalat Nigeria and has approved a complete transfer of 100 per cent of its shares in the Nigerian firm to the United Capital Trustees.
Although it was not clear Tuesday whether the two other investors would also announce their pullout, industry sources said they might be searching for willing investors that are ready take up their shares to raise funds to pay off the banks.
In its announcement on the Abu Dhabi Stock exchange Tuesday, Etisalat Group said efforts by EMTS to restructure the repayment of the syndicated loan by a consortium of banks to Etisalat Nigeria had collapsed.
â€œFurther to our announcement dated 12 February 2017, Emirates Telecommunications Group Company PJSC, â€˜Etisalat Groupâ€™ would like to inform you that Emerging Market Telecommunications Services Limited â€˜EMTSâ€™, the company 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, which are the EMTS Lenders.
â€œSubsequently, discussions between EMTS and the EMTS Lenders did not produce an agreement on a debt restructuring plan.
â€œAccordingly, 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.
â€œSubsequently, the EMTS Lenders extended the deadline for the share transfer to 5 p.m. Lagos time on 23 June 2017,â€ the filing by Etisalat Group on the Abu Dhabi bourse said.
Also confirming the looming takeover of the companyâ€™s operations, the Vice-President, Regulatory and Corporate Affairs, Etisalat Nigeria, Mr. Ibrahim Dikko, in a statement Tuesday, said: â€œEmerging Markets Telecommunication Services Limited also known as Etisalat Nigeria has announced the commencement of its restructuring with changes to its shareholding.
â€œAs it had earlier stated in a release, the negotiations with the consortium of lenders are considering a number of possible options.
â€œEtisalat Nigeria can now confirm the first stage of this has begun with a change in shareholding which was announced on the Abu Dhabi Stock Exchange on Tuesday (yesterday).
â€œEtisalat Nigeria can confirm discussions are on-going regarding other issues such as the trading name during this transition phase.
â€œOperations and services to our subscribers remain normal and will in no way be affected as we continue to deliver quality services to our subscribers.
â€œWe 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.
â€œEtisalat Nigeria wishes to express its profound gratitude to the government, the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) for their patriotic zeal and tireless efforts at ensuring collaborative and productive engagement.
â€œWe are also appreciative of the tremendous support we have received from the media since inception and we count on their continued support as we transition to a stronger business.
â€œWe will update our stakeholders and the public on further developments shortly.â€