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How Far Can CBN Go With Etisalat Rescue Plan?

By Rabiyat Usman:

Sequel to serie

s of managerial and financial crises that engulfed one of Nigerian’s leading telecommunication companies, Etisalat, a new management was put in place to reposition the company last week. The telecommunication company confirmed the appointment of new Board of Directors and top management a result of the on-going restructuring efforts to reposition the telecommunications company. The management is headed by a former Deputy Governor of Central Bank of Nigeria, CBN, Dr. Joseph Nnanna with Mr. Oluseyi Bickersteth, Mr. Ken Igbokwe, Mr. Boye Olusanya and Mrs. Funke Ighodaro, as members. A statement from the company said Mr. Boye Olusanya had been confirmed as chief executive officer, to replace Mr. Matthew Willsher, while Mrs. Funke Ighodaro takes over from Mr. Olawole Obasunloye as chief finance office.
This new management was put in place following the financial crisis that has been rocking the telecommunication company. Etisalat had obtained loan from 13 banks – Guaranty Trust Bank, Access Bank, Zenith Bank, UBA, Fidelity Bank and First Bank, among others to refinance an existing commercial medium term debt of $650m and continues its network rollout across the country.
The company later sought receivables financing.
Receivables financing is an arrangement whereby a company uses its receivables (money owed by its customers) as collateral for loans to purchase equipment or assets. Etisalat then proceeded with its lease back arrangement with IHS , that is to sell an item and then lease (or rent) that same item. Both the sale and the lease back were in dollars.The huge depreciation of the naira against the dollar means that the firm will need an increasing amount of naira to meet up with dollar payments. With an economy in recession which has led to a drop in consumer spending means that Etisalat will continue to struggle with revenue.
In the midst of all these events, the Nigerian Communications Commission (NCC) discussed with the Central Bank of Nigeria (CBN) and some commercial banks in the country over the unpaid loans issue they have with Etisalat Nigeria.
NCC said that the commission will not fold its arms and allow any bank to take over the telecom company because of the effect that it could have on the industry.
In the cause of the crisis, the Chairman of Etisalat Nigeria, Mr. Hakeem Bello Osagie, also resigned his appointment following the approval of a restructuring plan for the telecommunications firm alongside his board members.
Even in the cause of all these unfolding events, the Nigerian Communications Commission (NCC) recently said Etisalat Nigeria and its creditors have reached an amicable resolution of key issues pertaining to its $547 million indebtedness.
The Commission, in a statement in Abuja recently, said it was confident that the discussion process that was currently ongoing on mutually agreed terms would be successful.
The statement, signed by NCC’s Director of Public Affairs, Tony Ojobo, said “the Commission is confident that the amicable resolutions reached by the parties would further strengthen Etisalat’s capacity to continue to provide services to its over 20 million customers and to fulfill its obligations to its other stakeholders as a going concern, regardless of any changes that the parties have agreed to Etisalat’s ownership, its board and/or its Executive management”.
Ojobo also said: “The Commission is pleased to note that Etisalat and its creditors have successfully reached an amicable resolution of key issues pertaining to its indebtedness, and that a smooth transitional process is currently ongoing on mutually agreed terms.”  The new board and management put in place have a lot of expectations from the public and the company’s shareholders in particular.
It won’t be out of place for the newly- constituted board to take the debt with various banks with all seriousness .They could be restructured for effective result. Secondly, they should seek for new shareholders to broaden their investment base. Thirdly, they could use their expertise to increase market share for Etisalat. They will have more money. These recommendations can be considered singularly or simultaneously. On the whole, Emirates Telecommunications Corporation, branded trade name Etisalat(Nigeria), are still standing despite their numerous challenges. Etisalat is a multinational based telecommunications service provider, currently operating in 17 countries across Asia, the Middle East and Africa. The Emirates Telecommunications Corporation was founded on 5th October, 1976. Etisalat was the third fixed-line service provider and fifth mobile operator in Nigeria after MTN, Glo and (V-mobile, E connect, Celtel, Zain) Airtel.
Etisalat Nigeria launched one of the first major broadband services in the country – EasyBlaze. The company is known for its innovative products and services such as the Eco sim and the first network to offer special numbers to Nigerians as their mobile numbers through the 0809uchoose campaign. For the very first time, mobile phone customers could choose numbers special to them to create their own phone number. This tradition of customer-focused innovation continues today, with a growing customer base of more than 21 million subscribers.
The telecommunication company received many awards for the dedication to quality and innovation, barely six months into operations in Nigeria, the Nigerian communications commission (NCC) pronounced Etisalat Nigeria as the best network based on quality of service indices. In November 2012, Etisalat again received another award from the NCC for excellent customer service. Other accolades include: brand of the year, most innovative corporate social responsibility company, best telecoms customer service and most innovative mobile operator, among others.

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