In a very clear attempt to confirm its withdrawal from Nigeria, the Abu Dhabi-based Etisalat Group on Monday announced that it had terminated its management agreement with its Nigerian arm.
The group added that it has also given Etisalat Nigeria three weeks to phase out the brand in the country.
According to Reuters, Hatem Dowidar, chief executive of Etisalat International, said the company, with a 45 percent stake in the Nigerian business, is transferring its shares to a trustee after talks to renegotiate a $1.2 billion loan collapsed.
Although Etisalat Nigeria in a statement issued three weeks ago claimed that it had repaid 42 per cent of the loan.
“As at today, we can categorically state that the outstanding loan sum to the consortium(of banks) stands at $227m and N113bn, a total of about $574m if the naira portion is converted to US Dollars. This in essence means almost half of the original loan of $1.2bn, has been repaid.
“Etisalat continued to service the loan up until February 2017, when discussions with the banks regarding the repayment restructuring commenced,” Ibrahim Dikko, vice-president, Regulatory & Corporate Affairs of Etisalat Nigeria said.
However, Dowidar told Reuters in an interview that discussions were ongoing with Etisalat Nigeria to provide technical support, adding that it could continue to use the brand for another three-weeks before phasing it out.
“There’s a new board and we are not part of that company. We have sent our termination letter for the management agreement,” he said.
Etisalat Nigeria took-out a $1.2 billion loan with 13 local lenders in 2013 to refinance an existing loan and fund expansion, but struggled to repay four years later.
Mr. Dowidar said parent Etisalat had written down the value of the Nigerian business on its books and that transferring its 45 percent stake to the lenders after loan renegotiation talks collapsed had no impact on the group.
When asked whether Etisalat would consider entering Nigerian market again, Mr. Dowidar dismissed the possibility of such move.
“The train has left the station on that one. Being in that market as an investor … are we willing to risk more money compared to the reward for the long-term?” he asked.
“(Nigerian) lenders may try to continue to operate the company until they find a buyer (or) they may merge the company with the existing players in Nigeria”, he said.
“The brand agreement in either of these two scenarios won’t be a long-term thing, so we take out the brand; in the long term Etisalat won’t be in Nigeria.”