Local lenders have opposed a proposal by Etisalat Nigeria to convert part of the $1.2 billion loan into naira. Rather, the lenders want its parent, Abu Dhabi telecoms group Etisalat, and its shareholders to recapitalise the telco, it was gathered yesterday.
A source privy to the negotiations said the seven-year syndicated loan, on which the telco defaulted in payment schedule, has a dollar portion of $235 million which the carrier wants to convert into naira to overcome chronic foreign exchange (forex) crunch at the interbank market.
“Etisalat is asking for us to convert the dollar component to naira but banks don’t want that option and have told them to talk to their parent to settle the loan,” Reuters quoted a banking source as saying. The source said the regulators, the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) which had waded into the impasse and prevented a possible takeover of Etisalat Nigeria are favourably disposed to the naira conversion idea.
Vice President, Regulatory and Corporate Affairs at Etisalat, Ibrahim Dikko, said he would not be able to give update about the outcome of discuissions with the lenders. He promised to do that today.
The UAE’s Etisalat own 45 per cent of Etisalat Nigeria, while Abu Dhabi’s Mubadala owns 40 per cent of the company.
This meeting came about after the CBN and NCC agreed with local banks to prevent Etisalat Nigeria from going into receivership.
Global crash in oil prices has seen the country grappling with forex shortage since oil is the country’s major forex earner. The economy slipped into a recession last year for the first time in 25-years.
Most of the 13 lenders involved in the loan syndication had raised dollars abroad to participate, meaning that further naira weakness would see them receive fewer dollars.
The currency had lost half of its value since the loan, which matures in 2020, was made. Interest is due monthly and the next principal payment is due in May, the source said.
Etisalat, which generates 3.7 per cent of its revenues from the Nigerian business, has questioned the rationale of investing more in it and may sell its stake, sources say.
Etisalat had written down the value of Etisalat Nigeria last year to $50 million due to naira weakness, Moody’s said in a note, adding that the default at the affiliate company did not affect the parent’s credit profile.
Etisalat owes GT Bank N42 billion, and Access Bank N40 billion. It also owed Fidelity Bank N17.5 billion, the bank’s investor relations team told Reuters.
Etisalat has 20 million subscribers, according to NCC;s figures, making it the country’s number four mobile operator with a 14 per cent market share. South Africa’s MTN has 47 per cent, Globacom 20 percent and Airtel – a subsidiary of India’s Bharti Airtel – 19 per cent.