Etisalat Nigeria in talks over missed payments on $1.2bn loans

Etisalat Nigeria is in talks with local banks to renegotiate a $1.2 billion loan it took out four years ago to expand its network in the country after it missed payments, a senior executive told Reuters. This has sparked fears of a takeover of the assets of the telco.

Ibrahim Dikko, vice president for regulatory affairs at Etisalat Nigeria, said Etisalat missed payments due to an economic downturn in Nigeria, a currency devaluation there and dollar shortages on the country's interbank market. He said the telecoms firm was looking to renegotiate the terms of the loans. "We are in discussions with our bankers and have been for quite a while. They have not taken over the business and we are hoping that we can resolve the issue and find a way to renegotiate terms," Dikko told Reuters.

Nigeria has been running short of dollars as oil revenues have fallen along with the price of crude, pushing the economy into its first recession in a quarter of a century. This has weakened the local currency which trades at a lower level on the black market than the official interbank rate versus the dollar. The dollar shortages have made it difficult for companies to get access to foreign currency and as a result have struggled to repay dollar debts. Dikko said the business performed well last year and EBITDA (core profit) was positive.

The banks involved include Guaranty Trust Bank, Access Bank and Zenith Bank. Etisalat blamed its inability to fulfil its obligation to the banks on the current economic recession in Nigeria but the banks replied that Asset Management Company of Nigeria regulations demanding immediate cut down on the rate of their non-performing loans give them no other option.

A senior bank official among those affected said Etisalat management was given option of filing for bankruptcy but it was not taken. This option, he said, would have required the banks just a management to oversee the telecoms firm’s operations. Although the NCC is not happy with the takeover, a top source at the regulatory body NCC said on Tuesday, March 7 that it had approved the takeover that is now expected to happen today.

Meanwhile, in the bid to restore the ailing economy, the Federal Government has released the Economic Recovery and Growth Plan (ERGP) which unveils a road map for Nigeria’s economic recovery growth and sustainable development.