15/03/2017 08:12 AST
Abu Dhabi telecoms group Etisalat may sell its stake in Etisalat Nigeria, which has defaulted on a $1.2bn loan, but wants the company's debt restructured before it does so, two sources told Reuters on Monday.
Nigeria's central bank and telecoms regulator on Friday agreed with local banks to pursue a default deal rather than a receivership for Etisalat Nigeria so as not to deter investors and to avoid a wider debt crisis.
Etisalat is due to meet with creditors in Nigeria to discuss the default, the source said.
It was not clear whether Etisalat, which has a 45% holding in Etisalat Nigeria after converting a loan to equity in February, would divest completely. 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 told Reuters that the Nigerian affiliate of Etisalat had given notice to its Nigerian lenders that it would miss a payment in February but the two sides are yet to agree terms. Etisalat Nigeria signed a $1.2bn medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650mn 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, GT Bank, 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% stake in Etisalat Nigeria, wants a solution found, another source said. Mubadala declined to comment.
Etisalat has been hit hardest among foreign firms by dollar shortages in Nigeria.
Firms which invested in the West African nation in the era of high oil prices are struggling to repay loans or keep operating as the oil producer suffers from a slump in oil revenues, hitting its currency and dollar reserves.
Etisalat's chief strategy officer, Khalifa Hassan al-Forah al-Shamsi, told Reuters that it was making sure that in markets where there are currency fluctuations, operating costs are in local currency.
Etisalat Nigeria has 20mn subscribers, according to Nigeria's telecom regulator, making it the country's number four mobile operator with a 14% market share.
South Africa's MTN has 47%, Globacom 20% and Airtel - a subsidiary of India's Bharti Airtel - 19%. Etisalat had been asked to increase its stake in the Nigerian business, which made up 3.7% of its revenues, but questioned the rationale for doing so, given that Nigeria was in its first recession in a quarter of a century, Access Bank chief executive Herbert Wigwe told an analyst call.
Gulf Times
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