Industry analysts have picked holes in recent move by the Senate on Tuesday to begin investigation into the crisis between Etisalat (now 9mobile) and 13 Nigerians banks over a $1.2bn loan.
Only on Wednesday, Chief Executive Officer of Fidelity Bank Plc., Mr. Nnamdi Okonkwo said the bank has taken a 5 percent impairment charge on a 17.3 billion naira ($55 million) loan to Etisalat Nigeria, now called 9mobile. According to him, the deal is in line with a central bank request.
Observers who have been following the matter expressed worry on why the lawmakers will begin probe into an issue that has been technically resolved by the Central Bank of Nigeria (CBN) and the telecoms regulator, the Nigerian Communications Commission (NCC).
Majority of experts who spoke on the matter said the timing of the probe may be counterproductive considering the fact that Etisalat, currently 9Mobile is like a an aging bride, seriously in need of husband.
According to the Director, Telecoms Watch Nigeria (TWN), Dr. Luis Odafe, “To me, there is really nothing wrong for the lawmakers to exercise their oversight functions. However, I think probing the Etisalat issue would have come earlier than now it is seriously looking for buyers.
“Remember, 9Mobile must be sold within the given 180 days as given by the CBN when it intervened alongside the NCC. The banks whom the Senate want to save have not given any sign that they are not comfortable with the state of things at 9Mobile as all of them involved are looking onto the target time for the sale so that they can get their money which many of them have provisioned.
Continuing, Dr. Odafe argued that “With the new move to probe the matter, any reasonable and prospective investor whether local or foreign may wish to wait for the outcome and in the process, 9Mobile may end up missing the given deadline which will mean another danger entirely.
“Am aware that every probe at the Senate takes an average of three to five months to be concluded and some take more than that. For example, the probe of N30tn by the Senate Committee on Customs and Excise started since last year and is yet to end.
“Now, if Etisalat goes that way, who will come to buy it within the remaining two to three months of the given 180 days.
“To me, I think the CBN must act fast by telling the Senate that there is no need of creating a disruption in the ongoing plan to sale the telecoms on or before December 31st, this year, or else, what it has been avoiding will definitely happen which is hostile acquisition by the 13 banks,” Dr. Odafe, TWN boss argued
The probe of Etisalat, which has transformed to 9mobile, was based on the adoption of a motion by Senator Olamilekan Adeola (Lagos-West) at the plenary on Tuesday titled, ‘The need for Senate’s intervention in the recent Etisalat (Nigeria) $1.2bn debt crisis.’
Prayers of the motion, which were unanimously granted by the lawmakers, include to mandate the Committees on Banking, Insurance and Other Financial Institutions; Communications; Capital Market; and National Security and Intelligence “to investigate the management and utilisation of the $1.2bn loan facility obtained from the 13 Nigerian banks.”
The lawmakers also mandated the joint committee “to make recommendations on ways the Nigerian financial governance structure can be strengthened by legislations to prevent any future similar reoccurrence.”
They urged “the relevant financial intelligence agencies of the Federal Government to investigate the management of Etisalat Nigeria and hold the defaulting parties accountable for their actions.”
Adeola, in the motion, noted all the UAE shareholders of Etisalat Nigeria, including state-owned investment fund, Mubadala, had exited the company, with the resignation of top key management officers of the company.
According to him, “The Senate regrets that although it should ordinarily not be the duty of the Senate to wade into individual debt crisis of private sector businesses, the Senate is convinced that if this situation is not properly handled, it will have negative implications on the Nigerian business environment and foreign investments in Nigeria in general.
“The Senate regrets that a loan of this magnitude has the capacity of setting off another banking crisis in Nigeria, with banks looking for bailout once again,” Senator Adeola noted.