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The 9mobile sale will still go on regardless of the latest high court ruling in Abuja which attempts to stop the planned sale of the telecommunications company on the basis that some investors in the former Etisalat have demanded a refund of their invested funds, experts say.
This is because judicial precedence from similar cases in the past, by law should be applied.
Before the complains from Afdin Ventures Limited and Dirbia Nigeria Limited who claim to have invested a total of $43,330,950 million in Etisalat in 2009, Spectrum Wireless, another non-bank investor had gone to court demanding a refund of about $35 million, stating the same reason as not being recognised or carried along in the transition of the former Etisalat, now 9mobile.
However, despite earlier ruling by Justice Ibrahim Buba of the Federal High Court Ikoyi Lagos, on Friday 12, January 2018 which nullified the interim board of 9mobile and issued a buyers beware (caveat emptor) to bidders interested in the sale of 9mobile, judicial precedence applied and Barclays Africa was able to continue with the bidding process, after which Teleology emerged as the preferred bidder to take over 9mobile.
“The issue surrounding minority shareholdings in a private company such as 9mobile has precedence already set by the various change of ownerships in what is now Airtel from Econet,” Olusola Teniola, President Association of Telecommunications Companies of Nigeria (ATCON) told BusinessDay.
“Being a private shareholder, the investments made by them may appear to be passive as the majority shareholders in 9mobile have now walked away and left their shares to a trustee that has now engaged Barclays Africa to find a purchaser to ensure that EMTS- owners of the defunct Etisalat- is a going concern and able to meet its outstanding liabilities,” Teniola said.
According to him, this situation is not new to the industry and though each one is unique, the common thing is that it involves private limited companies operating in a very highly competitive industry and guarantees on return on investments are not assured.
Industry watchers are concerned that it is more than likely that the interruptions and tactics to derail the sale of 9mobile will dissuade investors in bringing in foreign direct investment (FDI) into Nigeria’s telecommunications sector, already grappling with lower FDI.
Foreign Direct Investments (FDI) into the Nigerian telecommunications sector dropped to its lowest in the last three years, declining by 35 per cent in 2017 to $606.6 million from $931.2 million in 2016, according to data from the National Bureau of Statistics (NBS).
The 2017 FDI figure was the lowest in the last three years as the annual downward trend, which began in 2015 worsened. In 2015, FDI into the sector had decreased from $994.3 million the previous year to $938.1 million, representing a 5.7 per cent dip.
There was also a marginal decline in 2016 as the figure went down by 0.7 per cent to $931.2 million.
It is believed that lessons should have been learnt from the sale of Nigerian Telecommunications Limited (Nitel) which dragged on for so long, as a result of several halts during the sale by the federal government.
Nitel also suffered from underinvestment for years, had its infrastructure encroached and at the end its assets were seriously undervalued.
Industry experts are of the view that the Nigerian Communications Commission (NCC), as the regulator has the final say on this matter, not a court of law.
With regards to the court cases by Spectrum Wireless, Afdin Ventures Limited and Dirbia Nigeria, Teniola said “creditors have first line of call to the assets of 9mobile and these creditors also include vendors and suppliers in the sector that are owed amounts far greater than the stakes that the minority shareholders are claiming.
“In reality the minority shareholders have no protection and have to consider their stakes as being eroded due to the very significant liabilities that are yet to be resolved. Using the courts doesn’t change the inevitable it just delays it,” Teniola told BusinessDay.
It is important to note that according to the Nigerian law, in the case of company liquidation, creditors will be paid according to a pyramid method in order of priority of payments where holders of fixed charges (if any) will be first priority. Secondly, amounts due and unpaid by the company to the employees’ compensation fund under the Employee Compensation Act 2010 will be paid and costs and expenses of the liquidation will be settled.
Other payments to be made include preferential payments, holders of floating charges which have crystalised; unsecured creditors and lastly shareholders.
Some aggrieved shareholders of 9mobile including a company said to be owned by Katsina Businessman Dahiru Mangal claim to have invested a total of $43,330,950 million after Afdin Ventures bought 1,300,391 class A shares at $13,003,910, which it paid for on August 14, 2009.
Dirbia Ltd acquired 3,300,004 class A shares at $30,030,040, for which it made payment on September 3, 2009.
“9mobile may have to consider him or buy him out, considering the company is in distress, which may result to them buying him out at a discount,” Bismarck Rewane, CEO of economics consulting firm Financial Derivatives, told BusinessDay by phone.
On whether or not his request will be granted by the court, Rewane, said it is one thing to ask and another to be given.
Jumoke Akiyode-Lawanson
