The decision is coming after the Central Bank of Nigeria (CBN) and the Nigeria Communication’s Commission (NCC) on Friday agreed with the 13 creditor banks to pursue a default deal rather than a receivership for the mobile operator so as not to deter investors and to avoid a wider debt crisis.
Etisalat is due to meet with creditors in Nigeria between today and tomorrow to discuss the default, a source told Reuters.
It was not clear whether the major stakeholder, which has a 45 per cent holding in Etisalat Nigeria after converting a loan to equity in February, would divest completely or retain some stakes.
Ahmed Bin Ali, Senior Vice President of Etisalat, declined to comment, while Etisalat Nigeria could not be reached. “It is at an early stage,” one source said of the sale.
Last week, a banking source said that the Nigerian affiliate of Etisalat had given notice to its local lenders that it would miss a payment in February but the two sides are yet to agree terms.
Etisalat Nigeria signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650 million loan and modernise its network.
But an economic downturn, a currency devaluation and dollar shortages on Nigeria’s interbank market led to it missing payment, Ibrahim Dikko, Vice President for Regulatory Affairs at Etisalat Nigeria, has said.
Banks involved in the loan include Zenith Bank, GTBank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.
Abu Dhabi state investment fund, Mubadala, which has a 40 per cent stake in Etisalat Nigeria, wants a solution found, another source said. Mubadala declined to comment.
Like several other foreign firms that invested in Nigeria, Etisalat has been hit hardest by dollar shortages in Nigeria. is struggling to repay loans or keep operating as the slump in oil revenues continues to hit currency and dollar reserves.
Etisalat’s Chief Strategy Officer, Khalifa Hassan al-Forah al-Shamsi, told Reuters that the company is making sure that in markets where there are currency fluctuations, operating costs are in local currency.
Etisalat Nigeria has 20 million subscribers, according to Nigeria’s telecom regulator, making it the country’s number four mobile operator with a 14 per cent market share. South Africa’s MTN has 47 per cent, Globacom has 20 per cent while Airtel, a subsidiary of India’s Bharti Airtel, has 19 per cent.