The NCC has stepped in to block banks from taking over struggling telco

In a statement, the NCC said it would do all within its regulatory power to ensure Etisalat’s roughly 21 million subscribers continued to enjoy the telcos services

The Executive Vice Chairman, Nigerian Communications Commission, Prof. Umar Danbatta.

On Tuesday, June 20, 2017, a consortium of Nigerian banks, led by Access Bank, and other players moved to takeover the struggling telecom company, whose parent company operates out of the United Arab Emirates (UAE), over its inability to pay a $1.2 billion loan facility after debt restructuring talks broke down.

This information had been brought to light by Serkan Okandan, Chief Financial Officer of the Etisalat Group (Etisalat’s parent company), in a filing with the Abu Dhabi Stock Exchange.

The filing read, in part: “ … the company received a default and security Enforcement Notice on 9 June 2017 requesting EMTS Holding BV (EMTS BV) established in the Netherlands, and through which Etisalat Group holds its interest in the company) requiring EMTS BV to transfer 100 per cent of its shares in the company to the United Capital Trustees Limited, the Security Trustee of the EMTS Lenders by 15 June 2017.

“Subsequently, the EMTS Lenders extended the deadline for the share transfer to 5 p.m. Lagos time on 23 June 2017.”

However, NCC spokesman Tony Ojobo, in a statement released Tuesday, June 20, 2017, said Etisalat’s operating license is personal to the company (per the requirements of the NCA) and as such is not transferable to a third party (in this case the consortium of banks through their loan trustee) without the NCC’s express approval.

The NCA act reads, in part: “The grant of a licence shall be personal to the licensee and the licence shall not be operated by, assigned, sub-licensed or transferred to another party unless the prior written approval of the commission has been granted.”

In the statement, Ojobo said the NCC would do all within its regulatory power to ensure Etisalat’s roughly 21 million subscribers continued to enjoy the telcos services (basically, it would do all it can to stop the banks from taking over Etisalat).

“The commission has taken proactive steps to cushion the impact of the takeover, this is without prejudice to the ongoing effort between Etisalat and the banks towards a negotiated settlement,” said Ojobo, according to a report by ThisDayLive. “In view of the recent development, NCC wishes to reassure all stakeholders in the telecommunications sector, and in particular the subscribers on the Etisalat network that the commission will ensure that the integrity of Etisalat Network is not compromised.”

Meanwhile, of Etisalat Nigeria’s three core investors [Mubadala Development Company, Etisalat Group, and Emerging Markets Telecommunications Services (EMTS)], only the Etisalat Group has approved the transfer of all its shares (which it has written down to zero) to United Capital Trustees Limited (the banks’ loan trustee).

Ibrahim Dikko, Etisalat Nigeria’s Vice-President, Regulatory and Corporate Affairs, confirmed the looming takeover in a statement. A part of the statement goes: “Emerging Markets Telecommunication Services Limited also known as Etisalat Nigeria has announced the commencement of its restructuring with changes to its shareholding. As it had earlier stated in a release, the negotiations with the consortium of lenders are considering a number of possible option.

“Etisalat Nigeria can now confirm the first stage of this has begun with a change in shareholding which was announced on the Abu Dhabi Stock Exchange on Tuesday (yesterday). Etisalat Nigeria can confirm discussions are on-going regarding other issues such as the trading name during this transition phase.”

Etisalat’s parent company and Etisalat Nigeria will now hold talks over management, tech, IP, brand names and so on, but the telco is still operational in Nigeria and it will remain so until negotiations are finalized. However, there is a possibility that the company’s GSM license could be revoked by the NCC, depending on the outcome of the talks (considering the NCC’s stance on the matter).

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