Fidelity Bank Plc has made a 50% provision against heavily indebted 9mobile, even as it plans to raise capital this year through the issuance of commercial paper to enable it to boost its lending capacity. This is according to the bank’s Chief Operations and Information Officer, Gbolahan Joshua.
Note that the bank had recently raised the sum of $400 million through Eurobond for the same purpose of boosting its lending capacity.
Embattled 9mobile Nigeria Limited is owing Fidelity Bank the total sum of ₦17.3 billion. This is just a fragment of the $1.2 billion which the telco had borrowed from a total of thirteen Nigerian banks including- Guaranty Trust Bank, Access Bank, Zenith Bank, UBA, Fidelity Bank and First Bank, etc. It, however, defaulted on payment, thereby prompting the necessary authorities to step in and put it up for sale.
What is the implication of this?
Fidelity Bank expects that the 9mobile’s acquisition process would be finalized by this second quarter, after which the actual loss incurred from the bad debt can be determined. In the meantime, the bank will have to keep making provisions for the ₦17.3 billion.
The bank announced in October last year that it had taken 5% impairment charge against the telco.
By first half of 2018, the 9mobile sale may have been completed and there would be clarity for all lenders.
We’ve made 50 percent (provision) on the exposure to 9mobile, we don’t expect that by the time the sale would be concluded we would see another classification.-Gbolahan Joshua
Meanwhile, the acquisition process for 9mobile has continued to be fraught with controversies. As we reported, Teleology Holdings, the preferred bidder, was said to have offered about half a billion dollars even though recent findings put their offering at $301 million.
Meanwhile, Smile Telecoms Holdings Limited, which came second in the bid, offered $300 million. Smile has since called for a review of the bidding process, and possibilities abound that the whole process might get nullified.
Fidelity Bank Plc is a mid-tier lender which was incorporated in 1988 and became a quoted company in 1999. It had a share price of ₦2.55 at the NSE trading ended May 2nd, 2018.