|
Getting your Trinity Audio player ready...
|
A letter sent by Olabiyi Durojaiye, chairman of the Nigerian Communications Commission (NCC) board to the Central Bank of Nigeria (CBN) listing “technical expertise” and “at least 3 years operational history” as new criteria for ownership, of 9 mobile is causing unease in the telecommunications sector as analysts warn against any political interference that may torpedo the almost concluded sale.
Following the CBN/NCC intervention on the Etisalat debt saga, a Board was appointed with CBN Deputy Governor Joseph Nnanna as Chairman and other members being Seyi Bickersteth and Ken Igbokwe.
Barclays Africa was then appointed to manage the sale process since June 2017 and the firm reports to the Board of 9Mobile (former Etisalat) overseen by the CBN and NCC.
After a rigorous process which included an initial shortlist based on technical criteria and then a shortlist based on financial bids, Teleology a firm led by Adrian Wood was declared as the preferred bidder, having submitted a bid of $500 million, significantly more than the $300 million submitted by Smile Communications, which was in turn announced as the reserve bidder.
Teleology was then asked to make a non-refundable deposit of $50 million within 21 days from the announcement. This payment was made and acknowledged by United Capital Trustees in a letter dated 21st March 2018. The payment was made two days earlier than the deadline, and failure to make this payment would have meant that Smile, the reserve bidder, would have been invited to replace Teleology.
Teleology and United Capital Trustees signed the Share Purchase Agreement (SPA) and Loan Purchase Agreement (LPA) on 21st March 2018. The CBN and NCC were present at the ceremony, our sources say.
However, BusinessDay learnt from sources watching the sale process that the letter from the Chairman of NCC’s board suggests or implies that; “NCC will only approve the transaction if the company has telecom infrastructure on the ground – in other words, if the company is an existing operator.”
As a result, issues were raised suggesting that the regulator may be sneakily trying to disqualify Teleology and unethically bring Smile in as the preferred bidder through a back door. This is especially as no such criteria were included in the start of the bidding process until this time.
According to BusinessDay sources, “NCC and CBN were constantly updated on the whole process and had the opportunity to raise any objections if any. No such objection was raised by the NCC at any time.”
Nigeria’s telecommunications sector remains mired in recession with the ICT sector contracting by -1.5 percent in Q4, 2017, up from the -4.5 percent contraction recorded in Q3, 2017, according to the most recent National Bureau of Statistics (NBS), data.
Total number of active mobile phone subscribers fell by 5.3 percent in the past year from 155.113 million in January 2017, to 142 million active subscribers in January 2018, according to the most recent NCC data.
Analysts tell BusinessDay that the NCC Chairman’s letter is like trying to create a new goal post at the end of a match, and is similar to how Nigeria procrastinated with the NITEL sale until it had lost most of its value, by the time it was sold.
“Why change the rules in the middle of the game, that is inappropriate,” Bismarck Rewane, CEO of Fianancial Derivatives told BusinessDay on phone.
“It will erode the country’s credibility and ability to attract foreign direct investments (FDI) as such will increase the stereotype of the bad reputation the country already has.”
Foreign Direct Investments into Nigeria slumped to a four-year low of $981 million in 2017. The first decline in FDI since BusinessDay started compiling data in 2013.
By comparison, Egypt attracted $8.7 billion in the fiscal year ended June 2017, while South Africa attracted $3.2 billion, according to data from the United Nations Conference on Trade and Development (UNCTAD).
Kenya attracted $394 million in 2016, according to most recent data by UNCTAD, while Ghana attracted $4.19 billion of FDI in 2017, according to data by the Bank of Ghana.
The NCC on its part told BusinessDay that the regulators are still expecting Teleology’s $450 million balance of its committed bid (due in 3 months) in-order to finalise the sale process.
Umar Garba Danbatta, Executive Vice Chairman of the NCC told BusinessDay yesterday that there was no cause for alarm, as the Commission has been involved in the 9mobile sale process from the onset, and has clearly identified Teleology as the preferred bidder.
“Teleology emerged as preferred bidder and paid the $50 million non-refundable deposit which was a condition for the process and that was not contested. However, Smile Communications was named reserve bidder, so it is only in the event that Teleology fails to pay the balance of $450 million in the next three months, that is when the offer will go to the reserve bidder,” Danbatta told BusinessDay.
When asked if the commission is in anyway inclined to favoring Smile Communications to allow for some sort of consolidation, since the company has technical infrastructure and expertise on ground and more than three years operational history in Nigeria, which meets up with the new criteria stated in the Board Chairman’s letter to the CBN, Danbatta said the decision for consolidation is not up to the NCC.
“Consolidation in the industry will come from the operators themselves. The NCC will not stand in the way of the operators if they want to consolidate. We will wait, and if it happens then we will comment on it,” Danbatta said.
Olusola Teniola, President, Association of Telecommunications Operators of Nigeria (ATCON) told BusinessDay in a telephone interview that the process cannot be concluded until the full payment of Teleology’s bid commitment has been received.
“The purchase has to be in full before we can start talking about any transfer of shares, and the regulatory approval for license can only be done after payment. That is how it is done everywhere in the world. A company cannot just be handed over to another company for takeover after only a deposit has been paid. Teleology needs to balance its initial payment and also re-assure the NCC that they can turn around 9mobile.
A regulator would always want to ensure that the Telco is in capable hands and that the new owners will not run down the company,” Teniola said.
Sources however tell BusinessDay that the final leg in the process is for the NCC as the telecom Industry Regulator to give a formal approval to the transfer of United Capital Trustees interest to Teleology. Teleology is then to make payment of its committed sum within 90 days and take over running 9Mobile.
“This new criteria of “technical expertise” and “at least 3 years operational history” is strange and probably an illegal, unethical and dis-ingenious way to disqualify Teleology and bring Smile in as the preferred bidder through a back door. No such criteria was included in the bid process until this time,” an insider with knowledge of the transaction, speaking to BusinessDay anonymously because of the sensitivity of the matter said.
Sources say the CBN Governor and NCC EVC were constantly abreast of the 9mobilebid process with the CBN presenting updates to the Board of the NCC.
The NCC was also represented at critical events in the 9mobile sale process including the stage of presentation of technical bids and the final bids held on 4 Dec 2017.
The NCC was present at the signing of the SPA between Teleology and United Capital Trustees and no objection was raised throughout the process by the NCC.
JUMOKE AKIYODE-LAWANSON & ENDURANCE OKAFOR
