Etisalat is a serial loan defaulter, Banks tell CBN

By Odunewu Segun

The debt crisis threatening to consume Nigeria’s fourth largest telecommunication firm, Etisalat, took a new twist during the week when the 13 lenders it owed described it a serial loan defaulter who once had the means to pay its debt but refused to.

According to National Daily investigations, Etisalat was making excellent margins of profit until 2015 when its financial system began to operate under the radar, a possible indication that the firm wished to avoid paying huge debts to a consortium of Nigerian banks.

In addition to the banks, Etisalat also reportedly owes significant sums to several vendors and suppliers. The company’s services remain in place despite the recent financial blowout with its lenders.

National Daily gathered from a source who was part of a meeting between the 13 banks, the Central Bank of Nigeria and officials of the embattled Etisalat Nigeria that the banks were unhappy that the facilities approved by them for Etisalat fell due for payment, but the company had serially defaulted on repayment, said the source.

Part of the facilities, National Daily gathered have become delinquent while the sponsors and management of Etisalat Nigeria were not forthcoming with the various restructuring options proposed by the lenders.

In their presentation, the 13 lenders also informed the CBN that while other network operators sold their towers and utilised the entire sales proceeds to repay their loans, Etisalat Nigeria in 2014 sold its towers but did not apply the sales proceeds to repay its loan.

The source said that the banks were not network operators and had no intention of running Etisalat. “All we want is to recover the loans; we cannot write off the loans as demanded by Etisalat, because the company is viable,” the source stated.

However, sources in Etisalat Nigeria disputed claims by the banks that the company had not made attempt to repay the facility, saying that the network operator has paid over 40 per cent of the actual loan of $1.2 billion.

Meanwhile, the Central Bank of Nigeria at the meeting informed the 13 banks that it would resist the move by the lenders to take over the network operator without its express approval.

ALSO SEE: How Etisalat loan will affect the banks

According to the source, the attempt by the banks to take over Etisalat clearly jeorpardises the federal government’s effort to attract Foreign Direct Investments (FDI) into Nigeria’s ailing economy.

He said the CBN, NCC and the banks would resolve the matter amicably.

A consortium of 13 Nigerian lenders led by Access Bank Plc moved to make good an earlier threat to take over Etisalat by Thursday, following its inability to meet the payment terms on a $1.2 billion loan that it took in 2013 for network upgrade and expansion.

The banks comprising Access Bank, Zenith Bank Plc, Guaranty Trust Bank Plc, FirstBank Limited, Fidelity Bank Plc, First City Monument Bank (FCMB), Stanbic IBTC, EcoBank, United Bank for Africa (UBA) Plc and Union Bank of Nigeria Plc, among others, had said they would take over Etisalat’s operations through its legal representative, United Capital Trustees.