LAGOS, MARCH 9, 2017 – Nigeria’s telecoms regulator and central bank governor intervened on Thursday to try and help Etisalat Nigeria resolve debt restructuring talks with its lenders, after the company missed a payment on a $1.2 billion loan.
A banking source told Reuters on Wednesday that the Nigerian affiliate of Abu Dhabi-listed telecoms company Etisalat , had given notice to its Nigerian lenders that it would miss a payment in February. Debt talks were triggered 10 days ago but the two sides have not been able to agree on terms.
One of the lenders, Access Bank said on Thursday that it was owed 40 billion naira ($131 million) by Etisalat Nigeria.
The consortium of 13 banks had asked Etisalat to convert loans from its parent into equity and inject fresh capital into its Nigerian unit.
The Nigerian Communications Commission (NCC) said in a statement that it was worried about the negative impact the issue could have on Eitisalat subscribers and the industry, and wanted to prevent a possible takeover of Etisalat by the banks.
NCC Chairman Umar Danbatta met with central bank Governor Godwin Emefiele to try and find a solution and ordered Etisalat Nigeria and the banks to meet again on Friday. It gave no details.
“NCC was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this may send to potential investors in the telecom industry,” it said in the statement.
LEASE PAYMENT AT RISK
Emirates Telecommunications Group (Etisalat) owns a 40 percent stake in its Nigerian affiliate, which accounted for around 3.7 percent of the group’s revenue in 2013.
Etisalat Nigeria signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650 million loan and fund a modernisation of its network.
Banks involved in the loan deal include: Zenith Bank , GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.
Access Bank’s Chief Executive Herbert Wigwe told an analysts’ call on Thursday that Etisalat had converted a shareholder loan to the Nigerian arm to equity to free up cashflows and that it may need to bring in fresh equity.
As well as the loan from banks, Etisalat also entered into a sale and lease-back of its phone towers with tower firm IHS Nigeria to free up cash. Analysts worry that IHS, which has Etisalat as its second-biggest customer, may be affected too.
JP Morgan analyst Zafar Nazim said in a note on Thursday that on Wednesday it downgraded IHS bonds due 2021 because of Etisalat Nigeria as it was uncertain whether the company could keep up with lease commitments.
Nazim also said it was unclear whether Etisalat’s parent firm would recapitalize the Nigerian operations given its small market share in the country, but added that a quick resolution to the loan issue would boost IHS bonds.
