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Etisalat going down, down: CBN, NCC intervention not enough rescue

ImageFile: Etisalat going down, down: CBN, NCC intervention not enough rescue

Etisalat Nigeria woes seem to be beyond the rescue as the Telco is in more troubled waters than can be imagined. Everything looks upside down for the telecommunications firm.

Reports have revealed that despite the temporary reprieve from what was an imminent commencement of receivership activities by a consortium of Nigerian Banks, the journey to financial freedom for Etisalat Nigeria seems quite far.

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TheNewsGuru reports the banks made up of some foreign and Nigerian banks including Guaranty Trust Bank, Access Bank and Zenith Bank, have been having a running battle with the mobile telephone operator, over a loan facility totalling 1.72 billion dollars (about N541.8 billion) obtained in 2015.

Etisalat was reported to have been taken over by the banks until the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) intervened.

But there seems to be more woes to the Etisalat saga.

Amidst intense competition and high operating costs, telecommunication firms in the country entered a sale and lease back deal, which involved selling off their communication masts and associated infrastructure to firms like IHS Towers.

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A source close to TheNewsGuru disclosed that major Telcos in Nigeria including MTN, Airtel, Etisalat, and amongst other, have sold their base stations, with only GLO left out.

This move was expected to save the Telcos from a combination of high maintenance costs, fuelling, taxes, right of way, and etc.

With leasing, the Telcos need not dole out huge capital outlay required for network expansion and will leverage on the synergy brought by collocation of assets.

In this new deal, most Telcos could share the same mast thus sharing fixed cost and reducing overheads.

Leasing it seems was a much cheaper option for them. No one envisaged paying back will be a challenge until oil price crashed.

Etisalat in 2015, sold 555 of its telecoms mast to IHS towers for an amount speculated to be in the region of $400 million dollars and in exchange will lease back the assets.

According to a Nairametrics report, Etisalat Nigeria has defaulted in payments to, and owing IHS Plc sum towering $8.5 million dollars in past lease rentals for use of communication masts.

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The Etisalat debt has led to a downgrade of IHS bonds by Fitch, as it is believed that Etisalat might not be able to repay the debt.

This has even left more questions unanswered.

Who else is Etisalat owing? Does the firm have other foreign currency denominated debts the masses need to be aware of? What about its trade creditors, are they being owed too? Have they paid their taxes, or will the government restructure that too?

And why aren’t the majority shareholders, Emirates Telecommunications Corporation stumping up the cash? Have they left their Nigerian subsidiary to fend for itself?

Emirates Telecommunications Group owns a 40% stake in Etisalat Nigeria. The Nigerian affiliate accounted for around 3.7% of the group’s revenue in 2013.

A more worrying implication about this debt is that should IHS decide to shut down the masts, Etisalat operations could be hampered and the 23 or so million Nigerian customers the NCC and CBN believe it could save from possible inconveniences could be jeopardized.

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For Etisalat, now, everyone is still talking, but sooner or later, no one might be talking.