Fresh facts have emerged detailing how the Governor of Central Bank of Nigeria, CBN, Mr. Godwin Emefiele, deployed his monetary policy skills to save the once beleaguered telecom company, Emerging Markets Telecommunications Services Limited, trading as Etisalat Nigeria, from total collapse.
By that masterstroke, the CBN Governor working behind the scene with relevant stakeholders was able to preserve the over 21 million lines of Etisalat, save thousands of direct and indirect jobs linked to the telecom company, and ensure it was not forcefully taken over by a consortium of creditor banks.
Contrary to earlier media spin which tended to indict some Nigerian public officials and corporates as architects of the misfortune that trailed Etisalat and its final buy-over by Teleology Group, new details of the behind-the-scene dealings have shown how the CBN and the Nigerian Communications Commission, NCC, fought hard to ward off what would have led to the total eclipse of Etisalat.
International and local sources familiar with the story, said Nigerians have Vice President Yemi Osinbajo, Emefiele and Prof. Umar Danbatta, the Executive Vice Chairman of the NCC, the nation’s telecom regulator to thank for the stunt they pulled to still keep Eitisalat in business and save thousands of Nigerians from being shipped into the job market.
Etisalat was indebted to a syndicate of about 13 Banks in Nigeria to the tune of $1.2 billion (secured by shares of Etisalat) and could not meet its financial obligations to its creditors.
Using the extant rate at that time, the total debt to the banks stood at N377 billion.
Further investigations have linked the financial crisis that rocked Etisalat to massive fraud and mismanagement of loans and incomes generated by Etisalat to Hakeem Bello-Osagie, then Chairman of Etisalat.
Bello-Osagie was the notable Nigerian face of the telecom company and was reputed to have brought Mubadala Development Company, a subsidiary of United Arab Emirates Sovereign Wealth Fund, (major shareholders of Etisalat Nigeria) into the country.
Sources told Pointblanknews.com that Bello-Osagie was owing over N200billion and an additional over $600million to different banks.
What became curious to industry watchers is that Etisalat had a revenue base of about N16billion per month according to a report a 2017 report seen by Pointblanknews.com
Burdened by the heavy debt, Bello-Osagie had approached the Presidency through a letter in June 2017 to President Yemi Osinbajo, seeking help and also suggesting ways by which the Government could help dig out the telecom company from debt.
Upon discovery of the poor corporate governance instituted by Belo-Osagie management and their inability to pay back the huge debts, Mubadala Development Company pulled out of the Etisalat deal in May 2017, leaving the Nigerian telecom giant at the mercy of its creditors.
Ibrahim Dikko, vice president for regulatory affairs at Etisalat Nigeria, explained in 2017 that Etisalat missed payments due to the economic downturn in Nigeria, a 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 back then.
Emirates Telecommunications Group (Etisalat) owns a 40 percent stake in its Nigerian affiliate, which accounted for around 3.7 percent of the group’s revenue in 2013. Etisalat Nigeria signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which is used to refinance an existing $650 million loan and fund 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”.
The banks, according to investigations, attempted to take over Etisalat Nigeria and place the company under receivership but for Nigeria Communication Commission (NCC) and Central Bank of Nigeria (CBN) intervention.
An interim arrangement was put up in which the old board was dissolved, and an interim board set up.
Investigations revealed that it was while the interim board was still in place that the shares of 9Mobile were transferred and kept under trusteeship with United Capital Trustees Ltd.
The syndicate Banks also appointed Barclays Africa now ABSA group to help them oversee the sale of Etisalat Nigeria shares to new investors.
During the sale process, five major companies were selected among fifteen. They include Airtel Nigeria, Smile Nigeria, Teleology Nigeria Ltd, Globacom, and Helios Investment Partners. Out of the five companies shortlisted Teleology Nigeria Ltd emerged as the preferred bidder while Smile Nigeria Ltd became the reserved bidder.
Out of the five companies, it was indeed clear that Teleology had not only the best financial plans but the highest quality of technical competence behind their bid.
“Teleology had over $300million in cash and an additional N100million to take over Etisalat. They were well prepared,” a source familiar with the process told pointblanknews.com.
Pointblanknews.com gathered that the firm has long paid off all funds it borrowed from AFREXIM and the CBN for the Etisalat project. But why the telecom company continues to crawl after all the investment made, remains unknown.
However, after one of the meetings in Abuja between Prof. Danbatta of NCC and the Central Bank Governor and his team, a decision was reached to intervene in the loan issue between Etisalat Nigeria and the consortium of commercial banks.
The meeting held at the Central Bank Headquarters in Abuja was convened by the financial regulator at the instance of NCC, the telecom regulator, to further deliberate on how best to stave off the attempt by the banks to take over Etisalat. At the end of the meeting, the Central Bank of Nigeria agreed to invite Etisalat management and the banks to a meeting towards finding an amicable resolution.
CBN and NCC said they were worried about the fate of the over 21 million Etisalat subscribers and the wrong signals this may send to potential investors in the telecom industry.
Etisalat has since July 2017 announced a change of name to 9Mobile and is being repositioned by its new owners to claw deeper into the Nigerian telecom market.