In confirmation of its withdrawal from Nigeria, the Abu Dhabi-based Etisalat Group announced Monday that it had terminated its management agreement with its Nigerian arm and gave Etisalat Nigeria three weeks to phase out the brand in the country.
The decision of the Abu Dhabi-owned network operator, which once held a 45 per cent stake in Etisalat Nigeria and 25 per cent of its preference shares, arose after its $1.2 billion loan talks with 13 Nigerian banks collapsed.
Chief Executive of Etisalat International Hatem Dowidar said Monday that there was no need for the brand in Nigeria after the collapse of the loan talks. However, he was silent on the loan repayment to the Nigerian lenders.
Nigerian regulators had intervened last week to save Etisalat Nigeria from collapse after talks with its lenders to renegotiate a $1.2 billion loan had failed. However, Etisalat Nigeria, in a statement issued three weeks ago, had claimed that it had repaid 42 per cent of the loan, leaving an outstanding $574 million.
“As at today, we can categorically state that the outstanding loan sum to the consortium (of banks) stands at $227m and N113bn, a total of about $574m if the naira portion is converted to U.S. 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,” Ibrahim Dikko, vice-president, Regulatory & Corporate Affairs of Etisalat Nigeria had said.
However, Etisalat Group announced Monday that it was pulling out, as all UAE shareholders of the company had exited and left the board and management of the Nigerian brand, reported Reuters. Dowidar said discussions were ongoing with Etisalat Nigeria to provide technical support, adding that it could use the brand for another three weeks before phasing it out. Nothing was said about how this will affect the network and its integrity as million of Nigerians are subscribed to the network.
In June, the Nigerian Communications Commission (NCC) had assured the public that the network’s integrity would not be compromised amid the loan disagreements. Accordingly, the NCC in conjunction with the Central Bank of Nigeria (CBN) had mediated by holding several meetings with the banks, Etisalat and other stakeholders to find a solution.
Following the intervention, Etisalat announced an interim board of directors to be chaired by Dr. Joseph Nnanna, a deputy governor of the CBN. Reacting to Etisalat Group’s statement Monday, a source close to Etisalat Nigeria said the ultimatum was not unusual since its management had known that they would have to change the brand identity, following the withdrawal of the Abu-Dhabi-based parent company from its Nigerian subsidiary.
According to the source, the Nigerian investors in Etisalat Nigeria, represented by Emerging Markets Telecommunications Services (EMTS) hold just a 15 per cent stake in the business, so it was only right for a change in brand identity.
Although he said no date had been fixed to announce the new brand, he informed THISDAY that it would be made public before the expiration of the three weeks given by Etisalat Group.
However, EMTS, trading as Etisalat Nigeria, said in a statement Monday night that it was aware of news reports regarding Etisalat Group’s withdrawal of the right to the continued use of the Etisalat brand in Nigeria by EMTS.
According to a statement signed by Dikko, EMTS has a valid and subsisting agreement with the Etisalat Group, which entitles EMTS to use the Etisalat brand, notwithstanding the recent changes within the company.
“Indeed, discussions are ongoing between EMTS and Etisalat Group pertaining to the continued use of the brand, and EMTS will issue a formal statement once discussions are concluded. “The final outcome on the use of the brand in no way affects the operations of the business as our full range of services remain available to our customers,” he said.
He added that EMTS launched in Nigeria in 2008 with ‘0809ja’ to affirm the “Nigerianness of our origin and sphere of influence. In our nine years of operation, we have remained a prime driver and avid supporter of the Nigerian spirit of excellence, and we will continue to stay true to our ‘Naijacentric identity’.” “This notion is strongly reflected in our core messages and depicted in major projects and initiatives which we have been known to support. All these initiatives have their foundation embedded in supporting key aspects of the Nigerian fabric: building Nigerian businesses and empowering Nigerians with a focus on the youth.
“Nigeria remains the soul of EMTS’ business and we have made the brand alluring to our teeming subscribers who see a piece of the spirit and character of Nigeria in everything we do. “EMTS is here to stay and we wish to assure our esteemed customers that our core values of youthfulness, customer-centricity and innovation will remain the pillars on which we operate. We thank our esteemed customers for their abiding faith in us,” he said.
Abu Dhabi state investment fund Mubadala has pulled out of Etisalat Nigeria after the telecoms firm failed to renegotiate a $1.2 billion loan taken out four years ago with 13 Nigerian banks, the Central Bank of Nigeria (CBN) said.
It gave no details on what it meant by "pulled out" but said it had intervened in the loan renegotiation talks to prevent job losses and asset stripping.
Etisalat Nigeria had repaid $500 million of the loan before it defaulted in February due to a currency devaluation and its only remaining investors are its Nigerian partners, led by company chairman Hakeem Belo-Osagie.
On Tuesday, parent company United Arab Emirates' Etisalat, said it was carrying its 45-percent stake at nil value, and that the Nigerian lenders had ordered it to transfer its shares to a loan trustee by June 23 after the renegotiation failed.
Neither Etisalat nor Mubadala, which owns 40 percent of Etisalat Nigeria, could be reached for comment.
"Given the inability of Etisalat (Nigeria) to come to an acceptable agreement with the banks, the largest shareholder in the company, Dubai-based Mubadala Development Company of the United Arab Emirates, has now pulled out of the company as well as the ongoing negotiations," the central bank said.
"It was based on the attempt of the banks to takeover the company that the financial and telecommunications regulators have moved in to intervene and forestall down-sizing and asset stripping," it said.
Central bank spokesman Isaac Okorafor said representatives from the central bank and the telecoms regulator would hold talks in the next few days with lenders and IHS Towers, the mobile phone tower managers, as well as "equipment suppliers".
The original loan was a seven-year facility to refinance a $650 million loan and fund expansion of Etisalat Nigeria's network. The company missed payments in February after sharp falls in the Nigerian naira bloated the loan's value, making repayments difficult.