LAGOS, JULY 4, 2017 – Etisalat Nigeria Chairman Hakeem Belo-Osagie has resigned after talks to renegotiate a $1.2 billion loan collapsed and prompted a major foreign shareholder to exit the telecoms company, two company sources told Reuters.
Etisalat Nigeria is the biggest foreign-owned victim of dollar shortages plaguing the country due to lower oil prices and economic recession, leaving the company struggling to make repayments to lenders and suppliers.
Abu Dhabi state investment fund Mubadala, which had a 40 percent stake in Etisalat Nigeria, pulled out of the country’s fourth-largest mobile operator by market share after it failed to restructure the loan with Nigerian banks, the central bank said in June.
Wilshire told Reuters by phone that he was in the office on Monday and that his contract was with the Nigerian firm.
Talks of Mubadala leaving Nigeria started last year, one of the sources said, adding that the fund and parent company United Arab Emirates’ Etisalat had been unhappy with the performance of the Nigerian business.
“Hakeem had been negotiating hard … but … it wasn’t the optimal solution so he had to resign,” the source said.
The lenders initiated changes in Etisalat Nigeria’s shareholding structure last month. Etisalat said it was carrying its 45 percent stake at nil value.
“The biggest mistake the company made was taking a loan in dollars,” one of the company sources told Reuters. “It sounded like a good idea at first.”
Rival MTN, Nigeria’s biggest telecoms firm, had been sourcing loans in dollars but decided to switch to naira, one of the sources, who had worked for the South African firm, said.
In 2015 Etisalat started to cut down dollar payments but it was late, the sources said. It restructured its business, slashed jobs and sold off its towers to IHS Towers, the mobile phone tower managers, and leased them back but also linked payments to dollars.
The original loan was a seven-year facility to refinance a $650 million loan and fund expansion of Etisalat Nigeria’s network. The company missed payments in February after sharp falls in the Nigerian naira bloated the loan’s value, making repayments difficult.
A former Etisalat employee said the telecoms firm had contracted global accountancy firm PwC to manage staff salary payments for the past three months.
Nigerian regulators have said they want to protect Etisalat’s 4,000 workers and would hold talks with lenders and IHS Towers as well as other suppliers. They tried to prevent lenders placing the telecoms firm in receivership in March to avoid a wider debt crisis.
Etisalat Nigeria has a 14-percent market share in the country’s mobile market, behind MTN with 47 percent, Globacom with 20 percent and Airtel – a subsidiary of India’s Bharti Airtel – 19 percent.