Tension grips Etisalat ahead of banks’ threat to takeover firm due to loan default

There is palpable tension, anxiety and frustration at the headquarters of Etisalat Nigeria, over the failure of the GSM to repay a loan of over $1.72 billion it secured from a consortium of banks in 2015.

Among the local banks involved are Guaranty Trust Bank, Access Bank and Zenith Bank and a foreign affiliate of Stanbic IBTC.

Tension-soaked staff were seen in groups holding discussions amongst themselves as a result of the new development, which came, two days after the telecom sector regulator, the Nigerian Communications Commission (NCC) failed to mediate on the matter.

it was learnt that NCC’s inability to have the Central Bank Nigeria (CBN) move for a possible rescheduling of payment terms of the loan made it start looking for another avenue of salvaging the situation, said an insider, who would not want to be named.

The affected banks reportedly told Etisalat management, after a closed-door meeting on Monday, that the Asset Management Company of Nigeria (AMCON) was not giving them any breather on the loan.

The loan facility with 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.

Read also: NCC wades into Etisalat’s $1.7bn indebtedness to banks

They subsequently reported Etisalat to the banking sector regulator, the CBN, and its communications sector counterpart, the NCC. Our NCC source disclosed that Etisalat blamed its inability to fulfill its obligation to the banks on the current economic recession in Nigeria.

All attempts to get Etisalat to comment on the story proved abortive after several calls and text messages to relevant officials of the company went unanswered.

However, reports claim that Etisalat Nigeria is in talks with the local banks to renegotiate terms of the $1.2 billion loan it took four years ago to expand its network in the country after missed payments.

The banks are also said to be under pressure due to similar restructuring burden imposed on them by loan failures from other sectors, especially the oil and gas sector,.

A senior Regulatory Liaison official of Etisalat, Ibrahim Dikko, put it this way: “No bank has taken over the business. But we are hoping that we can resolve the issue and find a way to renegotiate for new terms.”

Dikko said the company had been servicing the loan, to the tune of almost half, and as such the question of taking over the company over the remaining one did not arise.
He confirmed that series of meetings with the banks and other authorities were ongoing, adding that the company was looking for other ways out of the crisis, including converting the loan into bond in naira equivalence.

Etisalat is Nigeria’s fourth largest telecoms operator, with about 22 million subscribers as at January, 2017, according to NCC records.

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