Etisalat Nigeria Changes Name to 9Mobile

• Banks seek clarity on telco’s cashflow

Emma Okonji

Troubled network provider, Etisalat Nigeria, Thursday sustained its march towards turning around its fortunes with the adoption of 9Mobile as its new brand identity.

The new brand name was decided at a meeting held in Lagos by Emerging Markets Telecommunication Services (EMTS), which had been trading as Etisalat Nigeria before the withdrawal of Abu-Dhabi-based Emirates Telecommunications Group Company (Etisalat Group) as a shareholder in the Nigerian telco.

Shortly after the meeting, where the new name was adopted, the management sent notification to its staff, informing them of the name change.

EMTS on Tuesday had proposed the name change to its customers and assured them that the change would not affect its operations in any way.

Although EMTS was yet to officially make the name change known to the public, sources close to the network operator said EMTS does not intend to announce the change with much fanfare.
Etisalat Nigeria had said it would soon change to a new brand identity that would reflect its new aspirations and philosophy.

The sudden decision to change its brand identity was sequel to the three weeks ultimatum given it by Etisalat Group to phase out the brand in the country.

It, however, said discussions were ongoing with its former Nigerian subsidiary to provide technical support.
The Abu-Dhabi-based firm relinquished its shares in Etisalat Nigeria last month, following the inability of the Nigerian firm to repay the $1.2 billion loan it took from 13 local banks in 2013 for network expansion and upgrade.

After the negotiations between the telco and its lenders failed, Etisalat Group pulled out and announced the transfer of 45 per cent of its stake and 25 per cent of its preference shares in Etisalat Nigeria to United Capital Trustees Limited, the legal representative of the lending banks.

Two other investors – Mubadala Development Company which holds a 40 per cent stake in Etisalat Nigeria and EMTS, representing the Nigerian shareholders, with 15 per cent stake – have remained committed to the Nigerian telco despite its debt crisis.

But even as Etisalat Nigeria moves forward with a new brand identity, its rescue has put its lenders in a quandary as they prepare for half-year results due this month.

Most crucially, the banks do not know whether to provision for loans to the company until they can work out its value.

A banking source told Reuters that the lenders first wanted to determine Etisalat Nigeria’s free cashflow to help them value its business before deciding on whether to impair the assets on their balance sheets or hold on to find new investors.

“No bank is talking about restructuring now, but it might get to that later once we are able to ascertain the true value of the company,” the source told Reuters.

Nigerian regulators intervened last week to save Etisalat Nigeria, the country’s fourth-largest mobile operator, from collapse and prevent lenders from placing the telecoms firm in receivership, prompting a board and management change.
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. Results are due from this month.

GT Bank with $138 million in outstanding loans and Access Bank with $131 million are among the most exposed to Etisalat Nigeria.

“We think that by the time the new management settles in, makes some changes and reduces costs, the company might bounce back,” the source said, adding that he expected support from the central bank, which has sought to avoid Etisalat Nigeria’s collapse from sparking a wider debt crisis.

Etisalat Nigeria’s new chief executive, Boye Olusanya, has said he was focused on getting the telco back on track to make profit, while working on the paperwork to eventually raise new capital.

Renaissance Capital analysts have estimated that Etisalat Nigeria could be worth $1.2 billion based on an enterprise value to operating cashflow multiple when compared with South Africa’s MTN and other African telecoms companies.
Nigeria’s banks are set to report interim earnings this month and investors will be watching for signs of a rise in non-performing loans.

The banks collected half of their interest payment for May from Etisalat so that the new team running the company has funds to keep it operating, the source said.

And any provisioning may not kick in until the next quarter.
“Given the understanding that Etisalat’s debt was performing till the end of the first quarter we believe the banks … might be required to make provisions in the second quarter,” Head of Research at Vetiva Capital Olalekan Olabode said.
“Rather than converting the debt to equity, we expect to see a restructuring in the near term,” he added.