Nigerian Regulator Seeks to Block Takeover of Etisalat Unit

LAGOS (Capital Markets in Africa) – Nigeria’s telecommunications regulator is seeking to block a potential takeover of Emirates Telecommunications Corp.’s unit in the country by a group of banks after the mobile-phone operator missed repayments on a $1.2 billion syndicated loan.

The Nigerian Communications Commission has urged the central bank to intervene in the matter because it is concerned over the fate of Etisalat Nigeria’s more than 20 million subscribers in the country, the Abuja-based NCC said in an emailed statement on Thursday. The Central Bank of Nigeria is scheduled to meet Etisalat Nigeria and the lenders on Friday, the NCC said.

Seizing the assets of Etisalat Nigeria would send the “wrong signals” to investors in the telecommunications industry, the regulator said.

Etisalat Nigeria said on March 8 that it’s in discussions with lenders to restructure $500 million of outstanding debt after a contraction in the West African nation’s economy and shortage of foreign currency made it more difficult to make repayments. The company in 2013 signed a syndicated loan pact with 13 Nigerian lenders, including Guaranty Trust Bank Plc, Zenith Bank Plc and Access Bank Plc to invest in its network and repay existing debt.

Loans Refinanced
Nigeria is snared in the worst economic slump in a quarter of a century as the continent’s biggest oil producer struggles to cope with crude prices that halved since mid-2014 and a foreign-exchange shortage that has pushed the naira to record lows and curbed imports of everything from food to factory equipment. Arik Air International Ltd., the country’s largest airline, was last month taken over by the government’s Asset Management Corp. of Nigeria to ensure its survival after the carrier failed to pay workers and suspended some flights.

Access Bank is owed 40 billion naira ($127 million) by Etisalat and all theinterest on the mobile-phone company’s facility has been serviced, Herbert Wigwe, the lender’s chief executive officer, said on Thursday. Access Bank has reorganized almost 5 percent of its total loan portfolio, he said. Zenith, the country’s second-largest lender by market value, has restructured as much as 55 percent of its loans to the oil and gas industry, representing 16 percent of its book, CEO Peter Amangbo said on Feb. 28.

While Etisalat Nigeria’s woes may initially delay payments to IHS Netherlands Holdco BV, creditors would want the mobile-phone company to survive and will ensure IHS is paid for the use of its communication towers, Fitch Ratings said in a statement on Thursday. Abu Dhabi-based Etisalat owns 45 percent of the Nigerian unit, with 25 percent of the Lagos-based company’s voting rights, according to Fitch.