Nigeria’s fourth largest GSM service provider Etisalat Nigeria announced on Tuesday that its parent company, Etisalat UAE has decided to divest completely from its Nigerian subsidiary. This follows weeks of negotiations between Etisalat and a consortium of 13 banks which had lent it $1.2 billion in 2013.

This article provides Nairametrics readers with a blow-by-blow account of how we got here.

Sequence of events that led to the pullout of Etisalat UAE

  1. Sometime in 2013, a consortium of Nigerian banks led by Access Bank, GTB and Zenith Bank lent Etisalat $1.3 billion, to help refinance its existing loans and also use same to finance working capital. $650 million was for refinancing and the balance for network expansion.
  2. In 2014, the global economy witnessed a gradual decline in the price of oil, sending emerging market economies in a tailspin.
  3. This led to a decline in government revenues ensuing a massive devaluation of the naira. The Central Bank then imposed capital controls affecting multinationals like Etisalat from meeting their foreign denominated obligations
  4. The ensuing economic recession further meant that the purchasing power of Nigerians was battered severely leading to lower revenues for most consumer driven businesses in Nigeria.
  5. By 2016, Etisalat had started defaulting in its loan obligations leading to a few bailouts from its parent company in Abu Dhabi
  6. In early 2017, news broke that the consortium of 13 banks which had lent money to Etisalat 4 years earlier had threatened to takeover the telco in order for it to recover their money.
  7. The Central Bank of Nigeria along with the Nigerian Communications Commission stepped in to midwife a possible deal that might avoid a forced receivership
  8. The consortium of Nigerian banks requested that Etisalat UAE, main investor, Mubadala step in with another bailout funds.
  9. Mubadala balked at any such thought insisting that its insistence to divest from Etisalat Nigeria was part of its global strategy to reduce its several overseas interests.
  10. Etisalat Nigeria then offered the consortium of Nigerian banks shares in the entity via a debt to equity swap deal. The consortium of Nigerian banks declined the offer insisting on a bailout.
  11. Rumours began emanating that Etisalat UAE was threatening to exit Nigeria. The Nigerian entity denied this on several occasions insisting that talks were ongoing. Mubadala also weighed in denying a speculation that it was about to abandon ship.
  12. Another rumor surfaced claiming that Nigerian billionaire, Mike Adenuga was interested in buying Etisalat Nigeria, its local competitor.
  13. Insiders reacting to the rumour of a divestment insist that this is the position and that the Etisalat group was only denying to protect the possibility of any deal.
  14. After several past deadlines, the consortium of Nigerian banks put forward a deadline of June 23rd for Etisalat Group to hammer out a solution or transfer its shares to a trust to be managed by an independent trustee.
  15. On June 20, 2017, Etisalat Abu Dhabi announced that it had transferred 70% of its holding in Emerging Market Telecommunications Services Ltd (EMTS) ,made up of 40% of its ordinary shares and 25% in preference shares respectively. EMTS is the vehicle used to invest into Nigeria.
  16. Former Chairman of UBA, Hakeem Bello Osagie is said to hold the remaining portion of the share.
  17. Apart from divesting from Etisalat Nigeria, Etisalat UAE may also withdraw its brand name from the Nigerian entity meaning that the network could change its name anytime soon.
  18. The shares have now been transferred to a trust named United Capital Trust, a subsidiary of United Capital Plc and will be warehoused there till a buyer is found.
  19. We understand that Etisalat is talking to a group of private equity investors. Funds raised from any potential sale will be used in part to repay the loans.

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