Abu Dhabi
Etisalat Group on Monday said it has taken the difficult decision to exit the Nigerian market to protect the wider interests of the group and those of its shareholders, a top executive told Gulf News on Monday.
Etisalat Group entered the Nigerian market in 2008 through Emerging Markets Telecommunications Services Ltd (EMTS), following the procurement of a 15-year Universal Access Service License (UASL) in 2007 by Mubadala, said Hatem Dowidar, Chief Executive Officer, Etisalat International.
At the time, Nigeria was widely regarded as one of the most strategically important telecom growth markets in Africa with the largest population in the region, yet a low mobile penetration of just 20 per cent, he said.
He said the company reported positive earnings (EBITDA — Earnings before interest, tax, depreciation and amortisation) in less than four years of operations and has since become the fastest growing telecommunications network in the country.
“In 2014-2015 the company witnessed record growth of 18%, achieving subscriber base of 22 million Subscribers,” the CEO said.
Despite the fundamentals to support growth and increase mobile penetration, Nigeria’s macroeconomic conditions, steep currency devaluation and market challenges have had a detrimental impact preventing EMTS continuing its ambitious growth plan, Dowider said.
Nigerian regulators intervened last week to save Etisalat Nigeria from collapse after talks with its lenders to renegotiate a $1.2 billion loan, which was taken to refinance an existing loan and fund expansion, failed. Etisalat, with a 45 per cent stake in the Nigerian business, said in June it had been ordered to transfer its shares to a loan trustee after the talks had failed. Dowidar said all UAE shareholders of Etisalat Nigeria, including state-owned investment fund Mubadala, had exited the company and left the board and management.
“In summary, before the full impact of FX deterioration, Etisalat management was delivering sustainable and profitable growth,” Dowider said. However, on top of an uncertain business climate, regulatory issues, the irrational behaviour of some competitors, which entered into a price war most notably around data tariffs, limited the ability of the company to move prices upwards to balance for inflation and increasing costs, he said.
EMTS negotiated in good faith with the lenders and offered a debt-restructuring proposal. The lenders did not accept the EMTS proposal, the CEO said.
Dowider said that EMTS have met repeatedly with Nigerian authorities, including the telecommunications regulator, NCC, and the Central Bank of Nigeria, to keep them informed of the seriousness of the situation and the need for a restructuring of EMTS debt to return the company to insolvency.
He made it clear that Etisalat Group was not affected by this decision as rating agencies have re-affirmed Etisalat Group’s high credit ratings and said that the carrying value of EMTS shares in Etisalat Group books is zero.
He said that one of the key reasons for EMTS failure of the loan, which was disbursed in part in US dollars, was the worsening of Nigeria’s exchange rate position, floating of the currency following the devaluation of the Naira, and prohibiting the conversion of US$-demoninated debt into Nigerian Naira debt by the monetary authorities.
— with input from Reuters
