ABUJA, FEBRUARY 22, 2018 – Nigeria’s telecommunications regulator said tougher financial-health checks on the country’s biggest mobile-phone companies could prevent a repeat of last year’s collapse of debt-laden Etisalat and help stabilize the industry.
The Nigerian Communications Commission has compiled reports on the financial well-being of the local units of Johannesburg-based MTN Group Ltd., the market leader with 52.3 million customers, Bharti Airtel Ltd. and Lagos-based Globacom Ltd., NCC Executive Vice-Chairman Umar Garba Danbatta said in an interview. The regulator has identified some areas of concern and these “issues that can be addressed,” he said.
Etisalat Nigeria, which has been renamed 9mobile and is for sale, plunged into crisis almost a year ago. A consortium of banks seized control of a 45 percent stake from Abu Dhabi’s Emirates Telecommunications Corp. after it defaulted on a $1.2 billion loan. The Central Bank of Nigeria and the NCC stepped in to avoid the collapse of the company, which employs 4,000 people and has about 17 million subscribers, down from 19.6 million at the end of March.
Ensure Survival
While the central bank will do a financial check of the winner of the 9mobile auction, the NCC will be focused on the buyer’s ability to provide a quality service, Danbatta said in a hotel in Kano, a city in northern Nigeria. “These are all measures we’re putting in place to ensure the survival of 9mobile and prevent a repeat of what happened,” he said.
Two companies are vying to take over the embattled operator in a process that the NCC hopes will be concluded by the end of March. Lagos-based ThisDay newspaper reported that Teleology Holdings Ltd. and Johannesburg-based data provider Smile Communications are the remaining bidders, without saying where it got the information. Both companies declined to comment. Barclays Africa was appointed as sale adviser, the NCC said in November.
“Time is of essence,” Gbenga Adebayo, president of the Association of Licensed Telecommunications Operators of Nigeria said by phone from Lagos on Wednesday. “They can only get good value for this company for as long as it has good business.”
Weaker Naira
Nigerian companies have suffered since the 2014 oil-price crash triggered an economic contraction and sent corporate earnings plunging. Rampant inflation reduced consumers’ purchasing power and the central bank’s tightening of capital controls led to a shortage of dollars, which companies need to pay for imported equipment and service foreign-currency loans. The naira lost more than half its value against the greenback in that period.
Foreign investments in the telecommunications sector dropped 86 percent to $33.6 million in the third quarter of last year, compared to the same quarter the previous year, according to data from the Nigerian Bureau of Statistics.
Etisalat Nigeria would still be here, “but for the deterioration of the exchange rate,” Danbatta said. “The NCC will continue to put in place flexible regulations that will ensure the survival of telecommunications companies in the marketplace.”
