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Etisalat-Bank Saga Amidst Recession in Nigeria

By: Kelechi Alexander, Published March 21st, 2017

Etisalat Nigeria, being a subsidiary of Etisalat, a multinational United Arab Emiratebased telecommunications services provider, operates in about seventeen countries, in Asia, Africa and the Middle East. As a result of a huge amount of loan being owed by Etisalat Nigeria to some banks in Nigeria, sources reveal that the telecom company will be taken over by three Nigerian banks as a result of debts incurred by Etisalat over the years..

This new development is coming after the telecom regulator, the Nigerian Communications Commission, NCC, tried a couple of times to mediate issues between the telecoms company and the banks without results.

According to sources, Etisalat obtained loans amounting to $1.72 billion - from a consortium of foreign and Nigerian banks in 2015 to facilitate reconstruction and expansion of Etisalatís network operations here in Nigeria. The loan facility totaling $1.72 billion (about N541.8 billion) involving a foreign-backed guaranty bond, was for Etisalat to turn around its network and expand its operations in Nigeria. However, the banks claimed that Etisalat had failed to service the debt as agreed since 2016.

As claimed by the banks being pressured by the Assets Management Company of Nigeria (AMCON) to reclaim the loan by any means. Base on anonymous reports from some NCC officials, the NCC as the regulatory body for telecoms in Nigeria, has done all its possible best, interacting with the Central Bank of Nigeria (CBN) to see that the banks would not have the right to take over the distress telecom operator.

An unidentified Etisalat official blames their inability to pay back the incurred loan on the current recession in Nigeria. The banks said to be involved in the takeover are Access Bank, Guaranty Trust Bank and Zenith Bank. Emirates Telecommunications, EMT Group trading as Etisalat, own a 40 per cent stake in its Nigerian affiliate, which accounts for about 3.7 per cent of the groupís revenue in 2013.

The respective banks, according to source, said they were most unhappy with Etisalat because the telecom giant could not present an independently verifiable proof that their volume of business went down by the magnitude that could put significant loan repayments in jeopardy.

However, reports are that Etisalat Nigeria is in talks with the local banks to renegotiate terms of the $1.72 billion loan it took four years ago to expand its network in the country after missed payments.

Etisalat, which commenced business in Nigeria in 2009, is Nigeriaís fourth largest telecommunications operator with about 21 million subscribers as at January 2017. Efforts have been made by both the NCC and CBN to ensure that Etisalat remains in business while the consortiums of banks meet their obligations to their customers. A meeting was held on March 16 to agree on a payment restructuring path going forward for the telecom operator amidst recession in the Nationís economy. NCC appears not to be favourably disposed to the takeover proposal; as it believed that Etisalat is not only a viable going concern, but also willing and able to negotiate the servicing of its loans.

Etisalat Nigeria is determined to continue its operations in Nigeria and to also engage in massive expansion of its service reach to the rural parts of the country, despite the huge amount of debt loan incurred.

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