Following failure of negotiations with lenders regarding a $1.2 billion loan, Abu Dhabi owned telecommunications networks, Etisalat has terminated its management agreement with its Nigerian arm and has given Etisalat Nigeria three weeks to phase out the brand in the country.
Chief executive of Etisalat International, Hatem Dowidar said on Monday that there was no need for the brand in Nigeria after the collapse of the loan talks.
Etisalat Nigeria took-out a $1.2 billion loan with 13 local lenders in 2013 to refinance an existing loan and fund expansion, but struggled to repay four years later.
The Nigerian Communications Commission and the Central Bank of Nigeria recently intervened to save Etisalat Nigeria from collapse after it failed to pay the remaining $589m from the $1.2bn loan, but all talks with lender was unsuccessful.
Etisalat, with a 45 per cent stake in the Nigerian business, had been ordered to transfer its shares to a loan trustee after it became obvious that it could not pay up the $589m debt of the original loan.
However, with the current development, Dowidar said in an interview with Reuters, “all UAE shareholders of Etisalat Nigeria, including state-owned investment fund Mubadala, had exited the company and left the board and management.”
He said it was tough to say what the lenders would do.
The Etisalat CEO added, “The brand agreement in either of these two scenarios won’t be a long-term thing, so we take out the brand; in the long term, Etisalat won’t be in Nigeria.”
He had earlier told Reuters that discussions were ongoing with Etisalat Nigeria to provide technical support.
“There’s a new board and we are not part of that company. We have sent our termination letter for the management agreement,” Dowidar said of the ongoing discussions with Etisalat Nigeria.
According to him, the parent company (Etisalat) has written down the value of the Nigerian business on its books and that transferring its 45 per cent stake to the lenders after loan renegotiation talks collapsed has no impact on the group.
When asked whether Etisalat would consider entering Nigeria again, he said, “The train has left the station on that one. Being in that market as an investor…are we willing to risk more money compared to the reward for the long-term?”
Etisalat Group entered the Nigerian market in 2008 through Emerging Markets Telecommunications Services Ltd (EMTS), following the procurement of a 15-year Universal Access Service License (UASL) in 2007.
At the time, Nigeria was widely regarded as one of the most strategically important telecom growth markets in Africa with the largest population in the region, yet a low mobile penetration of just 20 per cent, he said.
The company reported positive earnings (EBITDA — Earnings before interest, tax, depreciation and amortisation) in less than four years of operations and has since become the fastest growing telecommunications network in the country.
