$1.2b Etisalat loan: NCC, ATCON say no cause for alarm

By Kokumo Goodie, Lagos, Nigeria

Etisalat has said it is in talks with a consortium of local lenders to renegotiate the terms of a $1.2 billion loan it took to expand its network in Nigeria after it missed its payments schedule, while the Nigerian Communications Commission (NCC) and the Association of Telecoms Companies of Nigeria (ATCON) have assured of amicable settlement.

NCC said it has asked Etisalat to furnish it with details of the transaction, assuring that there was no cause for alarm as the matter will be settled.

Director of Public Affairs at NCC, Tony Ojobo, said the regulator will intervene based on the facts made available to it by Etisalat.

He dismissed insinuation that the Commission had given its regulatory approval for management take-over of the carrier.

Also reacting, the Association of Telecoms Companies of Nigeria (ATCON) advised the Federal Government to intervene to save the telecoms industry from collapse by easing access to foreign exchange to carriers.

President of ATCON, Olushola Teniola said: “The report that the banks have taken over the management of Etisalat is not true. I state that categorically that it is not true and where that information came from needs to be verified. It is not true. I have substantiated information that the top management of Etisalat Nigeria (EMTS) is in full control of the company; there has not been any regulatory approval for the take-over of the company. The situation is that Etisalat owes some interest rate payments which has not been met , so that means that they have basically not met their obligations, so they are currently negotiating with the said banks to come to conclusive resolution.

“The reason why this has happened is that at the time Etisalat took this facility two years ago, the naira was very favourable to the dollar and the size of this loan is quite high, it is above $1billion.

“So the problem that has happened since they took the facility to expand the network, the dollar to naira has gone in the opposite direction. At the point when they took it, naira was 160/dollar or a dollar was 160 to the naira.  Now the same dollar is 450 at the black market. So you can see that it that doesn’t matter what amount of planning you do, it’s going to be very difficult to continue to sustain the payment on the initial loan that was taken and because of thus, it is causing Etisalat some difficulties to meet its obligations. I am sure that the management is doing everything possible to bring about amicable settlement with the lenders.”

Vice President for Regulatory Affairs at Etisalat Nigeria, Ibrahim Dikko, admitted that the telco missed payments due to an economic downturn in Nigeria, a currency devaluation there and dollar shortages at the interbank market.

"We are in discussions with our bankers and have been for quite a while. They have not taken over the business and we are hoping that we can resolve the issue and find a way to renegotiate terms," Dikko.

Emirates Telecommunications Group (Etisalat) owns a 40 perc ent stake in its Nigerian affiliate, which accounted for around 3.7 per cent of the group's revenue in 2013.

Etisalat signed a $1.2 billion medium-term facility with 13 local lenders in 2013, which it used to refinance an existing $650 million loan and fund a modernisation of its network.

Dikko said the business performed well last year and it was still in profit at the level of earnings before interest, tax, depreciation and amortisation, while loan repayments had been up to date "until recently".

He said the company was now exploring "all the options", which could include converting the loan into naira, but did not want to anticipate the outcome of talks with the lenders.

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