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UPDATE 3-Nigerian regulators push for deal in Etisalat debt talks

Published 2017-03-09, 03:31 p/m
© Reuters.  UPDATE 3-Nigerian regulators push for deal in Etisalat debt talks
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(Adds IHS statement)

* Etisalat missed payment on $1.2 bln loan

* Central bank, telecom regulator intervene

* Etisalat, lenders to meet regulators on Friday

By Camillus Eboh and Chijioke Ohuocha

ABUJA/LAGOS, March 9 (Reuters) - Nigeria's telecoms regulator and central bank governor intervened on Thursday to try to help Etisalat Nigeria resolve debt restructuring talks with its lenders, after the company missed a payment on a $1.2 billion loan.

A banking source told Reuters on Wednesday that the Nigerian affiliate of Abu Dhabi-listed telecoms company Etisalat ETEL.AD had given notice to its Nigerian lenders that it would miss a payment in February. Debt talks were triggered 10 days ago but the two sides have not been able to agree on terms.

Etisalat is the biggest foreign victim of dollar shortages in Nigeria. Firms aggressively invested in the West African nation in the era of high oil prices but are struggling to repay loans or keep operating as the oil producer suffers from a slump in oil revenues, hitting its currency and dollars reserves.

One of the consortium of 13 affected lenders, Access Bank, said on Thursday it was owed 40 billion naira ($131 million) by Etisalat Nigeria.

The Nigerian Communications Commission (NCC) said in a statement it was worried about the negative impact the matter could have on Etisalat Nigeria subscribers and the industry, and wanted to prevent a possible takeover of the unit by the banks.

NCC Chairman Umar Danbatta met with central bank Governor Godwin Emefiele to try to find a solution and ordered Etisalat Nigeria and the banks to meet again on Friday. It gave no details.

"NCC was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this may send to potential investors in the telecom industry," it said in the statement.

Etisalat and Etisalat Nigeria were not immediately available for comment.

LEASE PAYMENT AT RISK

Emirates Telecommunications Group (Etisalat) owns a 40 percent stake in its Nigerian affiliate, which accounted for around 3.7 percent of the group's revenue in 2013.

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 fund a modernisation of its network.

Banks involved in the loan deal include: Zenith Bank , GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

Access Bank's Chief Executive Herbert Wigwe told an analysts' call that Etisalat had converted a shareholder loan to the Nigerian arm to equity to free up cashflows and that it may need to inject fresh equity.

As well as the loan from banks, Etisalat had also entered into a sale and lease-back of its phone towers with tower firm IHS Nigeria to free up cash.

IHS said a payment of $8.5 million was more than 120 days overdue from Etisalat as per Dec. 31. "We ... will continue to pursue our contractual rights in collecting the outstanding amounts," IHS said in a filing to the Irish stock exchange.

JP Morgan analyst Zafar Nazim said in a note on Thursday that on Wednesday it had downgraded IHS bonds due 2021 because of Etisalat Nigeria as it was uncertain whether the company could keep up with lease commitments.

Nazim also said it was unclear whether Etisalat's parent firm would recapitalise the Nigerian operations given its small market share in the country, but added a quick resolution to the loan issue would boost IHS bonds.

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