The restructuring strategy adopted by the management of Etisalat Nigeria to resolve its debt crisis, raises hope for stakeholders’ interests, writes Emma Okonji of ThisDay
Since the threat to take over Etisalat’s telecoms business by a consortium of 13 local banks, led by Access Bank, following company’s inability to repay the $1.2 billion it took from the banks in 2013, the management of Etisalat has continued to engage key parties in order to resolve the matter.
The engagement level, coupled with the restructuring strategy, have been commended by Nigerians who strongly believe that it would protect various stakeholders’ interests, including that of subscribers, employees, trade partners and the Nigerian economy.
Etisalat Nigeria, in 2013, took a medium-term seven-year facility loan of $1.2 billion in dollar and naira denominations from a consortium of banks.
Citing economic downturn of 2015 and consequently sharp devaluation of the naira, which negatively impacted on the value of the loan, Etisalat had to halt the installment payment of the loan, a situation that compelled the banks to issue takeover threat notice to Etisalat.
As the threat lingered, one of Etisalat’s core investors, Emirates Telecoms Group Company, Abu Dhabi, last month pulled out of the Etisalat Nigeria shareholding structure and approved a complete transfer of 100 per cent of its shares in Etisalat to the United Capital Trustees Limited, the legal representative to the consortium of banks. This was closely followed by the resignation of six of its directors who were on the board of Etisalat Nigeria, all from United Arab Emirates (UAE). Last week, the Board Chairman, Hakeem Bello-Osagie also resigned in order to pave way for the reconstitution of a new board.
Since the debt issue came up, the management of Etisalat has been engaging all parties involved in order to resolve amicably. According to an official statement from the company, “Etisalat has made efforts to repay as much as 42 per cent of the debt owed the banks. We can categorically state that the outstanding loan sum to the consortium (of banks) stands at $227 million and N113 billion, a total of about $574 million if the naira portion is converted to US Dollars. This, in essence, means almost half of the original loan of $1.2bn, has been repaid.”
Stakeholders hold the views that Etisalat has given a great account of itself as the fourth largest telecoms company with millions of subscribers and should be accorded every necessary support along the pathway to sail out of the troubled waters.
A telecommunications analyst, Mr. Tolu Ogunbiyi, said: “It is in the best interest of all parties, particularly, the struggling Nigerian economy that investors are not scared away and employees are not offloaded to the already overwhelmed unemployment band. The manner with which Etisalat has handled the very challenging situation was commendable and raises hope for a considerable ending.”
According to Ogunbiyi, “We have a tough situation at hand but we should also commend how this issue was handled by the management of Etisalat Nigeria, led by Bello-Osagie, a calm and focused businessman.”
It was learnt that Bello-Osagie had to resign his appointment following the approval of a restructuring plan for the telecommunications firm.
With this development, the new board is expected to assume control of Etisalat and should hit the ground running with some plans jointly agreed by stakeholders.
Although the board chairman had planned to leave immediately the banks made the take-over move, he opted to wait until a road map for the company was finalised, THISDAY gathered.
It was said that the timing of the resignation was strategically delayed until when stakeholders have agreed on a plan and comes more than a week after Mubadala Development Company directors tendered their resignation. The development also reflects Bello-Osagie’s deep commitment to protecting the interest of all stakeholders.
It is now expected that Etisalat Nigeria, under its new shareholding structure will navigate through its current loan repayment challenge with minimum impact.
Mitigating the impact
The chairman has worked extensively with critical stakeholders in the previous months to prepare clearly articulated strategies and robust road maps that will mitigate the impact of the new shareholding restructuring and realignment on the operations and management of the telecoms company.
This, it was gathered, became successful following series of interventions from regulatory agencies, including the Nigeria Communications commission (NCC) and Central Bank of Nigeria (CBN) and other stakeholders to ensure that the best decisions were taken in the interest of the subscribers, employees and the Nigerian economy.
With fresh plans to further announce the composition of the new board, experts and industry stakeholders remain hopeful that the diligence of Etisalat will definitely see the telecoms giant through its challenges.