N541.8 billion debt: Three Nigerian banks set to take over Etisalat

Despite the intervention of the Nigerian Communication Commission, NCC, to broker a peaceful resolution between Etisalat Nigeria and a consortium of banks, it appears the effort may not have yielded a truce, as the banks are set to take over the telecoms firm today (Wednesday).

The consortium of some foreign and Nigerian banks, including Guaranty Trust Bank, Access Bank and Zenith Bank, have been having a running battle with the mobile telephone operator over a loan facility totalling $1.72 billion (about N541.8 billion) obtained in 2015.

The loan, which involved a foreign-backed guaranty bond, was for Etisalat to finance a major network rehabilitation and expansion of its operational base in Nigeria.

However, following the failure of the company to meet its debt servicing schedule agreed since 2016, the three Nigerian banks, prodded by their foreign partners, reported Etisalat to banking sector regulator, the Central Bank of Nigeria, CBN, and its communications sector counterpart, the NCC.

Although Etisalat blamed its inability to fulfil its obligation to the banks on the current economic recession in Nigeria, the banks said their attempt to recover the loan by all means was fuelled by the pressure from the Asset Management Company of Nigeria, AMCON, demanding immediate cut down on the rate of their non-performing loans.

A senior official of one of the banks who spoke with newsmen late on Tuesday said one of the options they have proposed to Etisalat management as a middle way out of the crisis was for it to request for a bankruptcy status.

The official, who requested that his name should not be revealed, since he was not authorised to speak on behalf of the consortium, said the bankruptcy option would require having receivership management appointed by the banks to oversee its operations.

But, the NCC appears not to be favourably disposed to the takeover proposal, the source said, as it believes Etisalat was not only a viable going concern, but also willing and able to negotiate its loan servicing.

However, a top source at the NCC said late Tuesday that the commission had approved the takeover, which is expected to occur today.

Etisalat is Nigeria’s fourth largest telecoms operator, with about 21 million subscribers as at January 2017, according to the NCC. It commenced business in Nigeria in 2009.