Connect with us

Business

$1.2bn Debt: Etisalat Loses 2.9 Million Subscribers

Published

on

Etisalat
  • $1.2bn Debt: Etisalat Loses 2.9 Million Subscribers

Etisalat Nigeria’s $1.2bn debt burden may have taken a toll on its operations as over 2.9 million subscribers left its network in six months.

One of Nigeria’s major telecommunications companies, Etisalat, lost over 2.9 million subscribers in the last two quarters, investigation has revealed.

Findings by our correspondent showed that as of September 2016, there were 22.5 million active subscribers on the network but the figure dropped to 20.8 million by December. This represents a loss of 1.7 million subscribers within three months.

The drop, thus, represents a loss of about N3.1bn potential revenue for Etisalat for the quarter, going by the industry’s average revenue of N1,830 per user, according to the quarterly subscriber operation data obtained from the Nigerian Communications Commission.

Similarly, in the first quarter of this year, the telco lost 1.2 million subscribers. This is also estimated to cost the telecoms company potential revenue of about N3.8bn.

Fact checks showed that between September last year and end of March, this year, Globacom increased its subscribers from 36.9 million to 37.3 million; Airtel grew from 34.1 million to 34.6 million but MTN dropped in subscriptions from 60.5 million to 60.3 million.

Observers conversant with Etisalat’s operations said the poor network investment, occasioned by $1.2bn debt to eight Nigerian banks, was adversely affecting the company’s ability to deliver quality service and impeding its expansion.

“As such, we are beginning to see an exodus of subscribers from Etisalat network to rival networks, most especially now that subscribers have options through the Mobile Number Portability,” a source conversant with the Etisalat’s operations said.

On the contrary, a former senior manager of a rival telco, MTN, disagreed that Etisalat’s quality services had disappeared because of the loan crisis and that subscribers were porting away due to poor services and reduced expansion.

She said, “It would rather be convenient to say that due to steps taken to pay the $1.21bn debt, it (Etisalat) currently doesn’t have the kind of cash flow for product development, product activation, promos and advertising, and other activities that should retain its customers at the bottom of the pyramid.

“The customers at the bottom of the pyramid are about 90 per cent and are those who don’t have any permanent loyalty to a particular telecoms company and are easily taken aback by small things like promos and advertising promises, bearing in mind that getting another SIM card costs just only N300.

The source, who spoke on condition of anonymity since she is no longer in the industry and would not want to be seen as working for a particular telecoms firm, said, “As a matter of fact, Etisalat has the best services – voice and data – in the country. Even when I worked in MTN until recently, most of us kept Etisalat as a second SIM card.”

Apart from owing eight local banks, it was also discovered that the company owed tower firm, IHS Nigeria.

This was made known by the IHS, which said that it had experienced instability in terms of timing of settlement of invoices with certain customers including Etisalat.

It should be recall that in 2014, the World Bank lent $200m to the London-based African tower manager, IHS, for the acquisition of about 2,100 tower sites from Etisalat Nigeria. Under this Master Lease Agreement, Etisalat sold its tower assets to the IHS, while the IHS leased it back in exchange for lease rentals.

The IHS also has an $800m bond, which is partly securitised from the cash flows of the Etisalat lease.

“We do experience volatility in terms of timing of settlement of invoices with certain customers. We have a strong relationship with Etisalat and it has continued to make some payments under our Master Lease Agreement.

“As of December 31, 2016, $8.5m was more than 120 days overdue from Etisalat. This amount represents less than 2.5 per cent of the expected proforma full-year combined revenue of the group for 2016,” a press statement from the company stated.

An analyst with JP Morgan, Zafar Nazim, said that it had downgraded the IHS bonds due 2021 because of Etisalat Nigeria as it was uncertain whether the company could keep up with the lease commitments.

Fitch Rating has said the IHS might experience delays in collecting payments from Etisalat Nigeria over the short term, but medium-term prospects should remain broadly intact.

“Should Etisalat Nigeria go into bankruptcy proceedings, we believe its creditors will want to maximise recovery prospects by continuing normal mobile network operations, which include payments to the IHS for use of its tower infrastructure,” it said in a statement.

But in an e-mail sent to our correspondent, the Vice-President, Regulatory and Corporate Affairs, Etisalat Nigeria, Ibrahim Dikko, said remarkable progress had been made to resolve the loan crisis.

His mail read, “We are optimistic that an agreement will be reached shortly and this will be communicated through the appropriate channels of the involved stakeholders.

“As a business, our immediate focus is to ensure that we not only sustain a positive performance, but that we are in a position to continue to grow the business, deliver excellent customer service and increase value to our stakeholders, which include our bankers.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Company News

Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

Published

on

Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

Continue Reading

Business

Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

Published

on

Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

Continue Reading

Business

Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

Published

on

Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending