As the Etisalat Nigeria’s $1.2bn loan crisis continues to deepen, its United Arab Emirates-based largest shareholder, Mubadala Development Company, has pulled out of the telecommunications company.
Mubadala, an Abu Dhabi state-investment fund, exited following the inability of Etisalat Nigeria to come to an acceptable agreement with a consortium of 13 banks over the debt, the Central Bank of Nigeria disclosed in a statement on Friday.
Consequently, Mubadala pulled out of the ongoing negotiations over the debt crisis, leaving only Etisalat Nigeria’s local partners to face the banks, according to the CBN statement.
The CBN spokesman, Mr. Isaac Okorafor, in the statement, said the banking sector regular had, therefore, intervened in the matter to forestall possible job losses and asset striping if the banks took over.
The statement read in part, “Given the inability of Etisalat to come to an acceptable agreement with the banks, the largest shareholder in the company, Dubai-based Mubadala Development Company of the United Arab Emirates, has now pulled out of the company as well as the ongoing negotiations, leaving only their local partners, led by Hakeem Bello-Osagie, to carry the burden.
“It was based on the attempt of the banks to move in to take over the company that the financial and telecommunications regulators have moved in to intervene and forestall down-sizing and asset stripping.”
The statement said the CBN and the NCC chose to intervene due to deepening nature of the crisis.
Okorafor said, “Although it should ordinarily not be the role of a regulator to decide how individual bad loans are resolved, the CBN believes that Etisalat is a systemically important telecommunications company with over 20 million subscribers that if not well handled, may have domino effects on the banking system itself.”
He further explained that the CBN and the NCC, sensing that banks might go ahead in the usual way and downsize the company’s over 4,000 staff, reached an agreement to intervene and implored the consortium of banks to reassess its position in dealing with Etisalat.
Okorafor explained that the collaborative move by the regulators was aimed at foreclosing the outcome of job loss and asset stripping and to ensure that Etisalat remains in business and is able to pay back the loans.
According to him, the CBN and the NCC, in the coming days, will meet with the syndicate of banks and the IHS, the tower managers and the equipment suppliers, in order to achieve what he termed “a win-win outcome” for all stakeholders.
The Vice-President, Regulatory and Corporate Affairs, Etisalat Nigeria, Ibrahim Dikko, did not respond to calls made by our correspondents over the matter.
He did not also respond to a text message seeking the company’s response to Mubadala’s decision to quit Etisalat Nigeria.
Etisalat has been embroiled with the consortium banks over the alleged $1.2bn loan.
The UAE’s Etisalat (Etisalat Group), with a 45 per cent stake in the Nigerian arm, on Tuesday said it had been ordered to transfer its shares to a loan trustee by June 23, after negotiations failed, Reuters reported on Wednesday.