Etisalat: A Promising Dream in Search of a Saviour

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Its entrance eight years ago was a game changer in the nation’s telecoms industry. But for Etisalat Nigeria, these are not the best of times, as it battles to avoid a take-over from banks it is indebted to. Labake Fashogbon writes that while the telecoms giant indeed owes, ensuring its survival is in all stakeholders’ interest, and that includes competition.

The Birth of a Dream…

When it arrived in 2008, it simply told Nigerians: ‘now you are talking’. That was its advertising pay-off. And it stuck as Etisalat, the fourth global service for mobile (GSM) telecommunication service provider to be licensed in the country, took off with a bang. While it did not totally revolutionise the industry, it put existing service providers on their toes. And one area Etisalat succeeded in making a bold statement was in provision of data. Knowing fully-well that it could not upstage the likes of MTN and Glo, pushers of the Etisalat brand focused on one area they knew they would make an impact. And they succeeded. Today, many believe when it comes to internet data, Etisalat is arguably first among equals.

The Loan, the threat and NCC’s intervention…

However, every dream has its threats, and Etisalat’s is not different. About two and half years ago, apparently in an attempt to broaden its operations and enhance its performance, the telecoms company had approached a couple of banks, which included Guaranty Trust Bank, Access Bank, as well as Zenith Bank for a loan, totaling $1.72 billion. By the exchange rate when the loan was acquired, it totaled just about N280 billion. But that was then. Today, that same loan has gone up to N514 billion. And that is why Etisalat is in deep trouble.

Earlier this year, in March to be precise, the National Communications Commission, NCC, offered to intervene in the impasse between Etisalat and its creditors. The NCC director of public affairs, Tony Ojobo said then that “after a meeting in Abuja between the Executive Vice-Chairman of NCC, Professor Umar Danbatta, and the CBN governor, Mr. Godwin Emefiele and team, a decision was reached to intervene in the loan issue between Etisalat Nigeria and consortium of banks.”

Ojobo continued that “the meeting which was held at the CBN in Abuja was convened by the financial regulator at the instance of the NCC and the telecom regulator to further deliberate on how best to stop the attempt by the banks to take over Etisalat.”

He added that at the end of the meeting, the CBN agreed to invite Etisalat management and the banks to a meeting the following day. He explained that the NCC, as a regulator, had moved quickly to intervene by reaching out to the CBN because it (NCC) was convinced of the negative impact such takeover move would have on the telecoms industry.

It was not known if the meeting the NCC promised to broker eventually held. But suffice to say that the troubled telecoms operator is still in dire straits with its creditors claiming that they too were under immense pressure from the Asset Management Corporation, AMCON, to recover non-performing loans. Unfortunately, the loan to Etisalat happens to be one of such. Therefore, to the creditors, it is either the telecoms giant pays its debts or a forceful takeover takes place. And that is where the morality or otherwise of such comes in.

 ‘The baby and the bath water’…

In whose interest is the takeover of Etisalat? That is the one million dollar question that is being asked within the telecoms industry. Naturally, competition will not lose sleep if the company is taken over. That may be unfair but that is how acceptable business behaviour goes. What happens to the thousands of workers? What of hundreds of contractors and suppliers? What of those whose lives indirectly revolve round the fortunes of the telecom giant?

Mallam Moyo Jaji, public affairs analyst, politician and former banker, told THISDAY during the week that since the country is operating a capitalist economy, there are no sentiments in business. He averred that Etisalat should try to pay. However, Jaji said he was vehemently against any hostile takeover of the telecom company.

“What usually happens with this type of takeover is that assets are knocked down and sold,” Jaji said. “I agree that Etisalat has to meet its loan obligations to its creditors but going by current exchange rates, there is need for renegotiation about time and terms of repayment. If they are asking for more time, I think the company should be granted such extension. Jobs will be lost, businesses will go under and many routines will be disrupted, should the company suffer any hostile takeover. While the competition will be happy that Etisalat is in trouble, the larger society will be the loser.”

‘We owe’, Etisalat admits, but…

Prior to this time, Etisalat claimed it had consistently and conscientiously met with its payment obligations. It said it had, in fact, paid about 42 per cent of its original loan taken from the consortium of banks.

Ibrahim Dikko, the company’s vice-president of corporate affairs, said in a statement: “as of today, we can categorically state that the outstanding loan sum to the consortium stands at $227m and N113bn, a total of about $574m if the naira portion is converted to US Dollars. This in essence means almost half of the original loan of $1.2bn has been repaid. Etisalat continued to service the loan up until February 2017, when discussions with the banks regarding the repayment restructuring commenced.”

The company, while admitting its indebtedness to the banks, said shareholders may yet emerge the biggest losers in the current situation unless a resolution was urgently reached. The most vulnerable are private equity holders from Nigeria.

“All of the infrastructure investment and services for which the loan was secured were paid through our banks and these are verifiable,” Dikko added.

Survival is in everyone’s favour…

Statistics show clearly that it might not really be in the interest of the larger society should the company go under. Check these: the company currently has about 2,000 workers, 115 Permanent Experience centres, 10 Temporary Experience centres, 90 kiosks at Total filling stations, and spread across the nation. In addition, thousands of more Nigerians are connected with the company either as vendors, sub-contractors, ancillary support services, and many indirect businesses have been built around the company’s service offerings.

A subscriber, Adeola Adewunmi, told THISDAY that it was a Catch-22 dilemma for both the banks and the telecoms company. She, however, admitted that should Etisalat go under, many would feel the impact.

“If the company goes under, Nigeria’s economy will take a big hit. However, if the loan deal is not resolved, the banks will see their bottom lines severely affected with implications for their own operations, shareholders and the economy.

And indeed, it is a catch-22 situation. As earlier stated, the NCC and the CBN have played critical roles to resolve the loan crisis. NCC’s Ojobo also reminded the lender banks to take note of relevant provision of the Nigerian Communications Act (NCA) 2003, as well as relevant provisions of the laws guiding the transfer of licences issued operators by the telecoms regulator.

Section 38(1) of the NCA says: “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 2 of the same provision equally states that, “a licensee shall at all times comply by the terms and condition of the license and the provision of this act and its subsidiary legislation.”

It must also be noted that perhaps, to compete favourably with the competition, Etisalat may have taken this loan for purposes that were not to immediately add value to its operations. But even at that, that does not mean that banks are not entitled to recovering their monies to balance their books. But for the creditors and the debtor, it is going to be a win-win situation if Etisalat survives: banks get their money back, employees retain their jobs and subscribers continue to enjoy the network’s services.

And as its advertising tag-line stated years back upon commencement of operations, Nigerians will still be talking.