Emirates Telecommunication Corp. ETISALAT

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Etisalat Nigeria negotiates over $1.2 billion bank loan

(6/19/2017 2:23:00 AM)

Etisalat Nigeria is still in discussions with Nigerian banks to refinance a US$1.2 billion bank loan, the telecommunications company’s largest shareholder, Mubadala Invesment Company, confirmed on Sunday.

Etisalat Nigeria, which is 45 per cent owned by the Abu Dhabi strategic investment firm, has run into difficulties meeting its commitments on the loan, which was arranged by a syndicate of local banks in 2013 and declared in default this past March following two severe devaluations of Nigeria’s currency, the naira.

"Etisalat Nigeria remains in ongoing discussions with all stakeholders, including government regulators and its syndicated finance facility lenders," according to a Mubadala official. He declined to comment on reports in several Nigerian news outlets last week that Etisalat Nigeria’s controlling Abu Dhabi partners had threatened to stop supporting the company if the bank syndicate would not agree to new terms, which include taking a significant "haircut" on the loan.

"The focus of these discussions is the company’s capital structure and ongoing capital requirements," the Mubadala official said. The talks initially began at the end of last year but have dragged on for several months following the declaration of default in March.

Abu Dhabi’s Etisalat Group owns 40 per cent of Etisalat Nigeria, with the remaining 15 per cent held by MyaCynth, an investment vehicle controlled by Nigerian businessman and Etisalat Nigeria chairman Hakeem Belo-Osagie.

Mubadala initially acquired a licence to operate as a telecoms provider in Nigeria in 2007, bringing in Etisalat and Mr Belo-Osagie the following year.

In 2011, the company borrowed $650 million – divided into an 82.5 billion naira tranche and a $100m tranche – from a local bank syndicate that was to be used to finance its 2G and 3G roll-out, as well as the acquisition of Alheri Mobile Services. Etisalat Nigeria now claims about 20 million Nigerian subscribers to its mobile and internet services, ranking it the fourth in the country.

However the operator’s subscriber base fell 11 per cent year-on-year in the first quarter of this year, which it attributed to the tough economic climate, together with the impact of disconnections as a result of a SIM disconnection process mandated by the country’s regulator.

In 2013, the company borrowed a total of $1.2bn, which included refinancing the $650m, from a syndicate that included most of the banks in the original financing, including Access Bank, which has said it is owed about $130m of the outstanding loan. Neither Etisalat Nigeria nor Mubadala have disclosed how much of the outstanding loan obligations are in US dollars.

The investment in Etisalat Nigeria is Mubadala’s only African telecoms holding and is a relatively small part of the company’s aerospace, ICT and renewables platform, which itself makes up about 11 per cent of Mubadala’s $122bn in holdings. According to previous company reports, the Nigerian investment has been substantially written down.

Etisalat Nigeria is one of the Etisalat Group’s 10 telecoms operators in sub-Saharan Africa, alongside operations in countries including Mauritania, Mali, Central African Republic, Cote d’Ivoire and Niger.

The National