BUSINESS

The crisis confronting debt-ridden Etisalat, one of Nigeria’s biggest telecom companies, took a disturbing turn yesterday, with the Central Bank of Nigeria (CBN) urging a consortium of banks to which Etisalat is indebted to the tune of over $1.2 billion to stop putting pressure on the telecom company.

Two banking sources, including one present at yesterday’s meeting between CBN Governor, Godwin Emefiele, and representatives from five bank lenders, said bankers were surprised at what struck them as the level of connivance between Etisalat and the highest officials at Nigeria’s regulatory bank. One of the bankers accused the CBN of demanding that they keep silent instead of telling their side of the story.

Leaders of First Bank, FCMB, Zenith Bank, Access Bank and others have been jittery ever since Dubai-based Mubadala Development Company of the United Arab Emirates, the company’s largest shareholder, pulled out 70% of their shareholding structure as attempts to restructure the huge loan failed.

One Nigerian bank source said Etisalat made a bizarre proposal to be allowed to pay a mere 10% of the subsisting loan and be forgiven the rest.

The banking sources said they countered with a plan in which Etisalat would convert its unserviced loan to equity so that more investment could be brought in to solidify the telecom firm’s capital base. Our sources said Etisalat resisted the creditor-banks’ proposal.

SaharaReporters learned that the bankers who met with the CBN Governor proposed that criminal investigations be conducted to determine how Etisalat might have diverted loans to other uses not related to the business for which the huge loan was obtained. The bankers accused Mubadala Development Company of the United Arab Emirates of walking away from their obligations, adding that the company had pulled off a similar maneuver in Tanzania and India.

The bankers insisted that the Dubai-based firm acted in a suspicious manner and might have capitalized on Nigeria’s weak financial governance structure.

They also accused the Nigerian Communication Commission (NCC) of staying aloof until the situation degenerated.

Etisalat has more than 20 million local subscribers to in its network in Nigeria. To its credit, the company provides some of the better networks and data services in Nigeria.

A major analyst in Nigeria’s telecom sector said Etisalat was making excellent margins of profit until 2015 when its financial system began to operate under the radar, a possible indication that the firm wished to avoid paying huge debts to a consortium of Nigerian banks.

In addition to the banks, Etisalat also reportedly owes significant sums to several vendors and suppliers. The company’s services remain in place despite the recent financial blowout with its lenders.

In a press statement issued earlier today, Etisalat’s Vice President, Ibrahim Dikko described calls for anti-corruption agencies to look into the telecom firm’s books as unnecessary, insisting that the company had nothing to hide.

Mr. Dikko stated that, contrary to media reports, the outstanding amount the company owes to the consortium of banks was $557million. He blamed Etisalat’s current financial condition on the economic recession that hit Nigeria
in 2015 which led to a spiraling of the value of the naira. He said the economic downturn made it difficult for the company to service its dollar-denominated loans.

Courtesy: SaharaReporters.

Contrary to reports in a section of the media, the banks being owed $1.2 billion by Etisalat Nigeria are yet to take over the telecommunication company from the investor, Etisalat UAE.

The consortium of banks led by Access Bank says it is interested only in the repayment of the loans since depositors are already asking for their money.
Other banks in the consortium are GTB, UBA, Zenith Bank, Fidelity Bank, First Bank among others.

According to the consortium, there was no share transfer to the banks, insisting that Etisalat has the money but planning run out of Nigeria with it.

It was further gathered from a member of the consortium that the announcement by Etisalat was a ploy to whip up sentiment against the banks so as not to repay the loans.

The source says “It is all lies that we have taken over the telecom firm. Etisalat has been leaking our discussions to the media to discredit us. All we wanted is our money and we are not interested in the collapse or takeover of the firm.

“We have given them concession on the loan in addition to options like injection of more capital, equity restructuring but they don’t want to do that. Etisalat was insisting that it has suffered devaluation.
“They sold towers and frittered away the money. They can’t say that this is exactly what they used the money for.”

It will be recalled that Etisalat Nigeria had in 2013 secured a N541 billion facility from a consortium of 13 banks led by Access Bank to refinance an existing commercial medium term debt of $650 million and continue its network rollout across the country.

Meanwhile, talks about the restructuring of the loans have been ongoing but appear to have collapsed.

But, in a statement on Tuesday, Etisalat Nigeria, announced a share restructuring which will see the banks take over control of the telecom firm.

The statement signed by Ibrahim Dikko, Vice-President, Regulatory and Corporate Affairs of Etisalat, noted that the negotiations were considering a number of possible options including bringing in new equity partners or going into a merger with other industry players.

“Discussions are ongoing regarding other issues such as the trading name during the transition phase,” Dikko said.
According to investigations, Nigeria is not the first country where Etisalat would try to play smart.

Etisalat had refused to repay loans in other countries such as Tanzania and India.

The United Arab Emirates telecom operator, Etisalat, invested in Zantel in Tanzania with 85 percent stake in Zanzibar Telecom limited (Zantel) and in India 45 per cent stake in Etisalat DB, a joint venture between Indian player DB Group and Etisalat of UAE.

It is on records that Etisalat UAE sold the stakes in both countries making substantial gains and leaving the local stakeholders in debt.

Pan African banking and financial services group, United Bank for Africa (UBA) Plc has added yet another laurel to its cap as it emerged the Financial Brand of the Decade at the Marketing Edge Awards which was held over the weekend.

The award in recognition of UBA’s innovative and pacesetting role, is a product of painstaking review and assessment of the iconic contributions of the brand to the growth, development and continuing evolution of the Nigerian banking industry. It also recognises UBA’s commitment to the enthronement of global best practices in the Nigerian banking sector.

The awards session was dedicated to outstanding brands (both corporate and product) and to personalities in the integrated marketing communication industry aimed at promoting the brand idea, in line with the company’s vision. The award also celebrated the career exploits and achievements of brands, agencies and nominees of which UBA emerged the big winner.

Mr. Toruka Osandunkwu, UBA’s Head, Brand Management, who received the award over the weekend in Lagos, expressed his delight and commended the organizers for the recognition given to UBA. He explained that UBA’s dedication to innovation and hardwork towards satisfying customers’ needs, earned the bank the award of Financial Brand of the Decade. He emphasized the bank’s endless commitment to excellent service in line with its renewed focus to put the customer first.

He said, “We have worked very hard to make this brand what it is today, and we are indeed grateful for the recognition of our various efforts, which have resulted in UBA coming up with innovations that are changing the face of banking on the African continent’.

Mr. John Ajayi, the CEO, Marketing Edge Publications Limited, organizers of the awards, said UBA’s impactful strides in the face of daunting challenges, especially its pathfinder role and market leadership for the past 70 years has earned the bank the award of Financial Brand of the decade.

United Bank for Africa Plc is a leading pan-African financial services group, with presence in 19 African countries, as well as the United Kingdom, the United States of America and France.

UBA was incorporated in Nigeria as a limited liability company after taking over the assets of the British and French Bank Limited who had been operating in Nigeria since 1949. The United Bank for Africa merged with Standard Trust Bank in 2005 and from a single country operation founded in 1949 in Nigeria – Africa’s largest economy – UBA has become one of the leading providers of banking and other financial services on the African continent. The Bank provides services to over14 million customers globally, through one of the most diverse service channels in sub-Saharan Africa, with over 1,000 branches and customer touch points and robust online and mobile banking platforms.

UBA was the first Nigerian bank to make an Initial Public Offering, following its listing on the NSE in1970. It was also the first Nigerian bank to issue Global Depository Receipts. The shares of UBA are publicly traded on the Nigerian Stock Exchange and the Bank has a well-diversified shareholder base, which includes foreign and local institutional investors, as well as individual shareholders.