By Justin Igho
Just last week, Ibrahim Dikko, Vice President, Regulatory Affairs, Etisalat Nigeria, was quoted in the media as stating that the telecoms company “considers it pertinent to state that parties to the negotiation are considering a number of options and discussions are at an advanced stage, regarding the syndicated loan agreement with the banks. It will, therefore, be presumptive and in bad faith to begin to predict the outcome.
“Discussions have so far been quite collaborative and we expect to reach a final resolution next week, by which time we will be in the position to make a definitive announcement.” He added that the negotiations “have reached and advanced stage,” adding that reports that Mubadala had exited Nigeria was speculative.
To give further credence to this viewpoint, Reuters, quoting a Mubadala spokesman, also said that discussions were still ongoing. From the sound bites thus far, it appeared that Etisalat was optimistic it would reach an amicable resolution with its creditor banks.
Etisalat ran into troubled waters on account of microeconomic situations, including foreign exchange crises as a result of government currency controls and a galloping inflation, which rose to 17 per cent in April. But things are beginning to look up. Nigeria’s inflation dropped to 16.25 per cent in May, from 17.28 per cent in April, according the latest data from the National Bureau of Statistics.
The consortium of 13 banks that staked $1.2billion in funding Etisalat Nigeria expansion drive, have to answer to shareholders, who demand value from investments made in Etisalat Nigeria. Thus, utmost caution must be taken by all parties involved to secure the interest of all.
It is also in the interest of government that a resolution to the matter is worked out swiftly. The prospect of throwing over 2,000 people into the job market and closing a means of income of thousands of businesses that provide ancillary services to Etisalat will be a big blow to a recovering economy.
Recently, the House of Representatives committee on telecommunications summoned the CEOs of service providers, including MTN, Glo, Airtel, Etisalat and Intels Nigeria over the massive loss of jobs in the telecoms sector, indicating that every arm of government is keen to maintain a stable economy and attract investments.
It is also important for the Federal Government, which is keen to attract foreign direct investment to take action that will ease investors’ fears. This is why the Nigerian Communications Commission and the Central Bank have been mediating in the Etisalatdispute with the banks because however the situation unfolds, the company needs to be kept operationally stable in the interest of the economy and all stakeholders.
According to the Nigerian Communications Commission (NCC) the telecom industry contributed 8.9 per cent to the National Gross Domestic Product of the country against the 8.6 per cent in 2015.
Professor UmaruDanbatta, executive vice chairman of the NCC told journalists in Lagos last month, that the Nigerian telecommunication sector has contributed about N15 trillion to the Nigerian economy since the liberalisation of the sector and since the inception of digital mobile communications about 17 years ago.
Danbatta said the sector had been a major contributor to Nigeria’s gross domestic product (GDP), adding between N1.4 trillion to N1.5 trillion on a consistent basis in the last one and half years. It has also contributed about nine per cent to the GDP in the first quarter of 2017 despite the recession.
Nigeria has over 150 million subscribers, accounting for 45 per cent of the population and many have stakes in the telecoms company. This is why, Tony Ojobo, CBN. Director, Public Affairs at NCC said that the 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 telecoms industry, if the uncertainty over the telecom company’s fate continues.
Gbenga Adebayo, Chairman, Association of Licensed Telecommunications Operators (ALTON) recently said the telecoms sector was critical to Nigeria’s economy “providing access to financial services, education and healthcare to millions of citizens, many for the first time, telecommunications has also played a critical role in reducing transportation, communication and transaction costs,” said Adebayo while pushing for review of multiple taxation in the sector.
The NCC has also stepped in to ensure the currency issues are resolved. “What NCC has done in this regard was to secure a priority window for forex for telecoms operators, which has never happened before,” said Umar GarbaDanbatta, executive vice chairman of the Nigerian Communications Commission (NCC) in an interview.
Danbatta further said, “The NCC had to step in and engaged directly with the financial regulator, the Central Bank of Nigeria (CBN), and an agreement was reached for a priority window for telecoms operators to enable them have access to foreign currencies in the midst of scarcity. So far, a couple of operators have been able to enjoy that priority window, and NCC will continue to push for more availability of forex for telecoms operators.”
Since all stakeholders, including the banks, Etisalat Nigeria management and staff, subscribers and the society at large have a stake in the success of the negotiations, a long term solution should be a key concern.
The NCC is currently carrying out a campaign on 2017, as the Year of the Nigerian Telecom Consumer, which will focus on two areas: Improving the quality of service and protecting and educating the consumer.
It is currently asking the telecom operators to ramp up quality of service. Etisalat have demonstrated that it can maintain its quality of service. Since 2013, the company has been implementing a measure to improve customer service by organising regional customer fora where customers are visited and network issues are discussed and evaluated.
• Igho, a telecom enthusiast, wrote in from Lagos.