Joshua Promise The Nigerian affiliate of Abu
Dhabi-listed telecoms company,
Etisalat risks being taken over
by financial institutions
over $1.2 billion loan it took
out four years ago after
missing a payment. It however
said it is in talks with 13
Nigerian banks to renegotiate
the terms.

At current official rate, the loan,
without interest stands at
N377 billion.

Ibrahim Dikko, vice president
for regulatory affairs at Etisalat
Nigeria, said Etisalat missed
payments due to the economic
downturn in Nigeria, a
currency devaluation and
dollar shortages on the
country’s interbank market.

“We are in discussions with
our bankers and have been for
quite a while. They have not
taken over the business and
we are hoping that we can
resolve the issue and find a
way to renegotiate terms,”
Dikko told Reuters.

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.

Dikko said the business
performed well last year and it
was still in profit at the level of
earnings before interest, tax,
depreciation and amortisation,
while loan repayments had
been up to date “until
recently”.

He said that the company was
now looking at “all the
options”, which could include
converting the loan into naira,
but did not want to anticipate
the outcome of talks with the
lenders.

A banking source said Etisalat
Nigeria had given notice to
Nigerian lenders that it would
miss a payment in February
which triggered a debt
discussion, adding that they
were yet to agree on terms.

“We want to see more skin in
the game from the foreign
parent. They also have a
shareholder loan we want
them to convert into equity
which would put less pressure
on cash flow and its
receivables,” the banker said.

The source said lenders
wanted Etisalat to increase its
stake in its Nigerian affiliate in
order to reduce the risk of the
company pulling out of the
country due to the debt issue.

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.

Several other firms took out
dollar loans in 2013 to expand
at a time Nigeria was seen as
an attractive investment
prospect. Its economy was
growing at 7 percent with a
stable currency and oil prices
were rising.

But now the country has been
running short of dollars as oil
revenues have fallen along
with the price of crude,
pushing the economy into its
first recession in a quarter of a
century. That has weakened
the naira which trades at a
lower level on the black market
than the official interbank rate
versus the dollar.

The dollar shortages have
made it difficult for local
companies to get access to
foreign currency and as a
result some have struggled to
repay dollar-denominated
debts with several lenders
having restructured loans to oil
firms.

Last month Nigeria’s biggest
airline Arik Air was placed in
receivership by the country’s
“bad bank” AMCON for unpaid
debts of around 147 billion
naira.