Contrary to initial reports, a new revelation has alleged that Teleology actually won the bid to acquire 9mobile for $301 million, not $500 million.
This revelation was made during the House of Representatives’ Investigative hearing on the collapse of Etisalat (now 9mobile), during which NCC’s Deputy Director, Legal and Regulatory Services testified.
He stated that a letter from United Capital Trustees dated March 29th, had confirmed to the Nigerian Communications Commission (NCC) that Teleology Holdings had actually paid a $50 million non-refundable fee, and had a balance of $251 left to be paid latest in 90 days.
Teleology Holdings made the non-refundable payment in March, a development that left observers to believe that a total outstanding of $450 million remained.
Why does this matter?
- As we reported, Teleology Holdings scaled through the highly contested bidding process to emerge the preferred bidder for 9mobile. A total of five telcos made it to the final bidding stage, including Globacom, Smile, Airtel, Helios and Teleology Holdings.
- Smile Telecoms Holdings Limited offered the sum of $300 million to come second in the bid, at a time when the general public believed that Teleology had offered half a billion dollars to emerge preferred bidder.
- Meanwhile, Smile Telecoms had since called for a review of the bidding process, having faulted its transparency of the exercise.
- It is apparent that the acquisition bid for 9mobile has so far lacked transparency. If indeed Teleology Holding has offered $301 million to emerge the preferred bidder as against the $300 million offered by Smile, then Smile could as well have won the bid after all.
- In the light of the above, therefore, it will not be surprising if the government eventually decides to cancel the exercise and start all over again.
- This new revelation if valid creates a new challenge for lender banks who are desperate to offload the asset and get their money back.
- Some of these banks already provided fully for the loans while other did partially. A complete sale of the company will result in a write back of the loss provisions, boosting the profits of the lender banks.
Etisalat Nigeria, now 9mobile had plunged into crisis last year following its default on a $1.2 billion loan it had obtained from a consortium of 13 Nigerian banks led by GT Bank. This led to the parent company (i.e., Etisalat of the United Arab Emirates) pulling out and relinquishing its 45% stake in the company.
Following this development, the Central Bank of Nigerian restrained the Nigerian banks from taking over the telco. The CBN instead constituted an interim board to oversee the operations of the company. 9mobile currently commands an estimated market share of 11.72% in the country.