Regulators save Etisalat Nigeria from receivership

Regulators save Etisalat Nigeria from receivership

Regulators save Etisalat Nigeria from receivership

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Regulators of the telecoms and banking sector say they have managed to stave off receivership of Etisalat Nigeria over owed a group of local banks.

Etisalat Nigeria, the number four mobile phone company in the country by subscriber numbers came under a looming threat of takeover by the bank consortium over alleged debt payment default.

Following the takeover threats by the consortium of banks, the Etisalat Nigeria faced a possible receivership, which is a type of corporate bankruptcy in which a receiver is appointed by bankruptcy courts or creditors to run the company.

But the Central Bank of Nigeria, the banking sector regulator and Nigerian Communications Commission, the telecoms watchdog say they have managed to secure a reprieve to free the mobile phone company from receivership by the creditor banks.

This followed a crucial meeting held Friday at the CBN Office in Lagos between the creditor banks and management of Etisalat Nigeria, which was chaired by Godwin Emefiele, Governor of CBN.

Following the takeover threats by the consortium of banks, the Etisalat Nigeria faced a possible receivership, which is a type of corporate bankruptcy in which a receiver is appointed by bankruptcy courts or creditors to run the company.

Mr. Godwin Emefiele, Governor, Central Bank of Nigeria (CBN)
Mr. Godwin Emefiele, Governor, Central Bank of Nigeria (CBN)

“Friday’s meeting succeeded in halting the attempt by Etisalat’s creditors at bringing it under any form of take over. Receivership was completely taken off the table in a meeting that was very productive and constructive”, Tony Ojobo, Director, Public Affairs, NCC says in a statement late Friday.

Accordingly, “the banks and the mobile network operator agreed to concrete actions that will bring all parties closest to a resolution” at the talks convened by CBN and NCC “to find a quick resolution to the loan default crisis facing the company.”

Also, the CBN Governor “was firm in declaring what needed to be done by both parties towards a quick resolution.”

On its part, the telecoms regulator “equally made it clear everything necessary must be done to protect the 23 million Etisalat subscribers and also protect the telecom industry to prevent potential investors from developing cold feet”, according to the NCC statement.

Ojobo also say that a deal was also reached under which the consortium of creditor banks and the mobile phone company will meet next Thursday “to agree on a payment restructuring path going forward” after they have booth “agreed to concrete actions that will bring all parties closest to a resolution.”

Details of the deals reached between the two parties were not disclosed, but Ojobo says that the “CBN and NCC were able to secure for Etisalat the necessary oxygen to enable it continue to meet urgent operational expenses.”

On its part, the telecoms regulator “equally made it clear everything necessary must be done to protect the 23 million Etisalat subscribers and also protect the telecom industry to prevent potential investors from developing cold feet”, according to the NCC statement.

Professor Umar Danbata, Executive Vice Chairman at NCC.
Professor Umar Danbata, Executive Vice Chairman at NCC.

The NCC spokesman also says the telecoms regulator will lead the CBN “in a possible crucial meeting with Etisalat’s shareholders anytime soon.”

During the week, the tekecoms regulator said that it opened talks with the banking sector regulator to avert the takeover of Etisalat Nigeria, over debts owed banks.

NCC says it met Thursday in Abuja with top officials of the Central Bank of Nigeria and “a decision was reached to intervene in the loan issue between Etisalat Nigeria and a consortium of commercial banks.”

Following the intervention, NCC and CBN called a crucial meeting for Friday that will bring to the table Etisalat Nigeria and the consortium of commercial banks owed by the mobile phone company, and number four by subscriber numbers.

In Nigeria, the mobile phone operator trades as Etisalat Nigeria promoted by Emerging Markets Telecommunication Services (EMTS), a private Nigerian company in partnership with Mubadala Development Company and Etisalat of UAE. The promoters of the mobile phone business acquired the Unified Access license from the Federal Government in January 2007, which includes a mobile licence and spectrum in the GSM 1800 and 900 MHZ bands. After that, Etisalat acquired a 40% stake in EMTS and is now the operator of the unified access licence.

Hakeem Belo-Osagie
Hakeem Belo-Osagie, Chairman of Etisalat Nigeria

The meeting hoped to resolve the loan issue followed a crucial meeting between Professor Umar Danbatta, the Executive Vice Chairman/CEO of NCC and Mr Godwin Emefiele, the Central Bank Governor and other member of the leadership of the banking industry regulatory agency.

“The meeting which 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 tomorrow, Friday, towards finding an amicable resolution”, Tony Ojobo, Director, Public Affairs at the telecoms regulatory agency said in a statement made available to Technology Times.

According to Ojobo, “the NCC as a regulator of the telecom industry had moved quickly to intervene earlier in the week by reaching out to the CBN convinced of the negative impact such a bank take over will have on the industry. NCC was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this may send to potential investors in the telecom industry.”

The UAE mobile phone group, Etisalat, was established in the United Arab Emirates in 1976, with footprints in 19 countries across the Middle East, Asia and Africa. In Nigeria, the mobile phone operator trades as Etisalat Nigeria promoted by Emerging Markets Telecommunication Services (EMTS), a private Nigerian company in partnership with Mubadala Development Company and Etisalat of UAE. The promoters of the mobile phone business acquired the Unified Access license from the Federal Government in January 2007, which includes a mobile licence and spectrum in the GSM 1800 and 900 MHZ bands. After that, Etisalat acquired a 40% stake in EMTS and is now the operator of the unified access licence.

Kolade Akinola

Technology Journalist at Technology Times

Mobile: + 234 (0) 807 401 6027

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