Etisalat may leave Nigeria over loan crisis

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Abu Dhabi telecoms group the owner of Etisalat may sell its stake in Etisalat Nigeria which has defaulted on a $1.2bn loan, but wants the company’s debt restructured before it does so  according to a source who spoke to National Daily.

The Central Bank of Nigeria and the Nigerian Communications Commission had agreed with local banks to pursue a default deal rather than a receivership for Etisalat Nigeria so as not to deter investors and to avoid a wider debt crisis.

It was not clear whether Etisalat, which has a 45 per cent holding in the Nigerian unit after converting a loan to equity in February, would divest completely.

The Senior Vice-President of Etisalat, Ahmed Bin Ali, according  had earlier said in a statement that it is too early to comment  while the spokesperson of Etisalat Nigeria could not be reached.

A banking source who spoke with National Daily have said that the Nigerian affiliate of Etisalat had given notice to its lenders that it would miss a payment in February, but the two sides have yet to agree terms.

Etisalat Nigeria signed a $1.2bn medium-term facility with 13 indigenous banks in 2013, which it used to refinance an existing $650m loan and modernise its network.

But an economic downturn, a currency devaluation and dollar shortages on Nigeria’s interbank market led to it missing payment, the Vice-President for regulatory affairs at Etisalat Nigeria, Ibrahim Dikko, said.

Banks involved in the loan include Zenith Bank, GTBank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

Abu Dhabi state investment fund, Mubadala, which has a 40 per cent stake in Etisalat Nigeria, wants a solution found, another source said.

Etisalat has been hit hardest among foreign firms by dollar shortages in Nigeria. Firms that invested in the country in the era of high oil prices are struggling to repay loans or keep operating as the oil producer suffers from a slump in oil revenues, hitting its currency and dollar reserves.

Etisalat Nigeria has 20 million subscribers, according to Nigeria’s telecom regulator, making it the country’s number four mobile operator with a 14 per cent market share. South Africa’s MTN has 47 per cent; Globacom, 20 per cent; and Airtel, a subsidiary of India’s Bharti Airtel, 19 per cent.

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