Etisalat has been instructed to transfer its 45 percent stake in Etisalat Nigeria to a loan trustee. The company has initiated changes to its shareholding structure after talks with lenders to restructure a $1.2 billion debt failed, the company said on Tuesday.
According to the Abu Dhabi-listed telecoms giant the firm had been in talks with Nigerian banks to restructure its loan after missing repayments, but those discussions failed to produce an agreement.
Etisalat is the biggest foreign-owned victim of dollar shortages plaguing Nigeria’s financial system because of lower oil prices and economic recession, leaving it struggling to make the loan repayments.
The loan that has proved so troubling for Etisalat Nigeria is a seven-year facility agreed with 13 local banks in 2013 to refinance a $650 million loan and fund expansion of its network.
Ibrahim Dikko, vice president for regulatory affairs at Etisalat Nigeria said that management was continuing to run the business after the shareholding changes and that there were contractual and regulator issues to be finalised.
Nigerian regulators had tried to prevent lenders placing the telecom firm into receivership to avoid a wider debt crisis and agreed with banks to pursue a default deal.
But lenders under pressure to avoid loan-loss provisions, have been pushing to finalise restructuring before half-yearly audits this month.
Sources say Etisalat, which generates 3.7 percent of its revenue from the Nigerian business, had questioned the rationale of investing more in the local unit, when asked by lenders to recapitalise its affiliate as an option.
An Etisalat Nigeria spokesman said the company was still in discussions with lenders to find a “non-disruptive” solution.
Etisalat said its financial exposure to Etisalat Nigeria was related to operational services worth 191 million UAE dirhams ($52 million) and that discussions were ongoing with lenders regarding the use of the Etisalat brand.
Etisalat said its financial exposure to Etisalat Nigeria was related to operational services worth 191 million UAE dirhams ($52 million) and that discussions were on-going with lenders regarding the use of the Etisalat brand name.
Etisalat Nigeria has 20 million subscribers, according to Nigeria’s telecom regulator, making it the country’s fourth biggest mobile operator with 14 percent market share. South Africa’s MTN has 47 percent; Globacom has 20 percent; Airtel has 19 percent market share.
Bunmi Banjo
