Why we intervened in Etisalat debt crisis — CBN, NCC

Financial sector regulator, Central Bank of Nigeria, CBN on Friday said its intervention in the ongoing debt crisis between Etisalat Nigeria and a consortium of banks was to save the Nigerian financial system.

CBN spokesperson, Isaac Okoroafor, said the two regulatory authorities intervened primarily to prevent job losses and asset stripping.

“Although it should ordinarily not be the role of a regulator to decide how individual bad loans are resolved, the CBN believes Etisalat is a systemically important telecommunications company with over 20 million subscribers that, if not well handled, may have negative implications for the banking system itself,” Mr. Okoroafor said.
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To forestall the banks going ahead to downsize the over 4,000 staff, Mr. Okoroafor said the CBN and NCC resolved to wade in to persuade the consortium of banks to reassess its position in dealing with Etisalat.

Etisalat had acquired the loan in 2013 to finance a major network rehabilitation and expansion of its operational base in Nigeria.

But, following its inability to meet its loan repayment obligations, Etisalat was pressurized by the banks with a demand notice to recover the loan.

Failure to persuade the mobile telephone operator to repay the loan, resulted in the consortium petitioned the NCC, the telecoms sector regulator, with a threat to take-over the company.

The CBN was invited by the NCC to help persuade the banks to accept a negotiated settlement by establishing a debt restructuring plan.

Mr. Okorafor described reports in some sections of the media insinuating high-handedness by CBN on the issue as “the height of mischief and insensitivity.”

He explained that the collaborative move by the two regulators was aimed at preventing job losses and asset stripping and to ensure that Etisalat remained in business and able to pay back the loans.

The CBN and NCC, Mr. Okoroafor said would, in the coming days, meet with the syndicate of banks and the IHS Towers, the tower managers and the equipment suppliers, to attempt to achieve “a win-win outcome” for all parties.

Negotiations between Etisalat and the consortium of banks had collapsed last week, resulting in majority shareholder, Dubai-based Mubadala Development Company of the United Arab Emirates, pulling out of the company.

Last Thursday, its parent company, Emirates Telecommunications Group Company PJSC (Etisalat Group), announced the collapse of the negotiations with banks over debt restructuring plan.

In its filing to the Abu Dhabi Securities Exchange in Abu Dhabi, United Arab Emirate, Etisalat Group said Emerging Markets Telecommunications Services Limited, EMTS, was served a default and security Enforcement Notice on 9 June 2017.

Consequently, EMTS Holding BV established in the Netherlands was given up to June 23, 2017 to complete the transfer of 100 percent of its shares to the United Capital Trustees Limited, the legal representative of the consortium of Banks.