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Etisalat CEO, CFO Resign as Crisis Deepens

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Etisalat
  • Etisalat CEO, CFO Resign as Crisis Deepens

The debt crisis rocking Etisalat Nigeria took a new turn Monday when the company’s chief executive officer (CEO), Mr. Matthew Willsher, and chief financial officer (CFO), Mr. Wole Obasunloye, resigned their appointments.

Their resignation came a few days after its Emirati non-executive directors (NEDs), representing the interests of Mubadala Development Company and Emirates Telecoms Group Company (Etisalat Group) also stepped down from the board, following the Nigerian company’s inability to meet its loan repayments amounting to $1.2 billion to 13 Nigerian banks.

The resignations also followed Etisalat Group’s reporting disclosure on the Abu Dhabi Stock Exchange two weeks ago that it had pulled out of Etisalat Nigeria and was transferring 45 per cent of its stake and 25 per cent of its preference shares in its Nigerian subsidiary to United Capital Trustees Limited, the legal representative of the lending banks.

Aside Etisalat Group, other shareholders of Etisalat Nigeria include Mubadala Development Company with a 40 per cent stake and Emerging Markets Telecommunications Services (EMTS), representing the Nigerian shareholders, with 15 per cent.

Etisalat had in 2013 approached a consortium of 13 local banks for a loan of $1.2 billion for network upgrade and expansion. The money was sourced in dollar and naira denominations.

However, citing the economic downturn of 2015-2016 and naira devaluation, which negatively impacted on the dollar-denominated component of the loan, Etisalat wrote its creditors informing them of its intention to halt the repayment of the loan in instalments, until such a time that it was able to raise more money.

Unsatisfied with the excuse from Etisalat, the banks threatened to take over the operations of the telecoms company should it fail to meet its payment obligations.

The situation forced Etisalat to enter into negotiations with the banks, seeking unreasonable write-offs, which the banks rejected.

Banks involved in the loan deal include: Zenith Bank, GTBank, FirstBank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

A breakdown of the amounts owed the banks showed that Zenith Bank has the highest exposure to Etisalat amounting to $262 million and N80 billion, GTBank has the second highest exposure of $138 million and N42 billion, Access Bank follows with $131 million and N40 billion.

Etisalat also owes UBA $125 million and N38 billion; FirstBank – $79 million and N24 billion; Fidelity Bank – $56 million and N17 billion; Stanbic IBTC – $25 million and N7.5 billion; FCMB – $15 million and N4.5 billion; and Ecobank – $10 million and N3.1 billion.

But Etisalat, in a statement two weeks ago, had countered this information, stating that it had paid $500 million up till February 2017. It said the outstanding loan to the lenders stands at $227 million and N113 billion, a total of about $574 million if the naira portion is converted to US dollars.

The CFO of the company was alleged to have diverted an estimated $700,000 realised from the sale of its telecommunications masts to IHS, a Nigerian towers and telecommunications infrastructure provider, instead of using the funds to repay the banks.

According to bank officials, they had financed the importation and purchase of the towers through Huawei of China to help build the infrastructure backbone for Etisalat.

But when the telco earned foreign currencies from the sale, Etisalat failed to repay its US dollar loans as was done by other telcos like MTN and Airtel.

As a result, the lending banks had resolved to take over the firm and pursue the prosecution of Etisalat’s directors.

However, their bid to take over Etisalat was halted by the Nigerian Communications Commission (NCC), the telecoms industry regulator, which made it clear that its licence was not transferable without its approval. NCC’s position was backed by the Central Bank of Nigeria (CBN).

The suspicion is that the mass resignations were an attempt by the directors and senior executives of Etisalat to absolve themselves of criminal and civil liability over the debt default.

As of press time, the NCC and CBN were in yet another crucial meeting with the banks and officials of Etisalat to address the crisis.

It was expected that a decision would be made on the appointment of new directors, CEO and CFO for the company and may be announced Tuesday.

An insider source said that the banks are bent on restructuring the board and management of the telecoms company to reflect their interest.

Also, another industry source disclosed that the board of NCC would hold an emergency board meeting Tuesday morning in Abuja to work out a plan to stem the value erosion and crisis of confidence that have hit Etisalat arising from the non-resolution of the debt crisis.

An NCC board member, who spoke in Abuja Monday, said that unless the matter was “handled strategically”, the current challenges facing the company might lead to the loss of subscribers on the Etisalat network, job losses, and erosion of investor confidence,

“I have just received a notice for an emergency meeting; the issue of Etisalat will be discussed and addressed. We have some other meetings that are coming up very soon where the issues will be addressed. One thing we don’t want to happen is for the company to collapse,” the board member said.

“That is why an institution like AMCON (Asset Management Corporation of Nigeria) was floated by the federal government. That is why you have Arik Airline still flying today, in spite of the huge financial challenges. It is not in our interest as a commission or as a nation to allow Etisalat to go down.

“We will look into it and find ways to solve the problem. If the foreign investors are no longer interested in the company we will reposition it in such a way that it will attract other investors. I am sure other people will be interested. I don’t think workers will lose their jobs because we are going to look into the case of Etisalat,” he added.

He also said that NCC was doing its best to ensure stability in the sector by ensuring that the necessary infrastructure is put in place to enhance efficiency in the sector.

He further revealed that the NCC was also looking at the ICT centres, including those in higher institutions in order to make them more effective; to make sure that clients or subscribers are not over charged and ensuring that there are customer centres across the country, where people can lay their complaints and instantly get attended to.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Brands

Eat’N’Go Expands To East Africa, Projects 180 Stores By Year End

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In a bid to further extend its tentacles beyond the West African market, Eat’N’Go limited, one of the leading Quick Service Restaurant (QSR) operators in Nigeria and master franchisee for world-class food brands – Domino’s Pizza, Cold Stone Creamery, and Pinkberry Gourmet Frozen Yoghurt, announced its expansion into the East African market.

This development comes after the successful acquisition of the franchisee which operated Cold Stone Creamery and Domino’s Pizza in Kenya. This acquisition will see Eat’N’Go limited become the largest Domino’s pizza and Cold Stone Creamery Master Franchisee in Africa with operations in Nigeria and Kenya.

Since its entrance to Nigeria in 2012, the QSR company has grown exponentially and has continuously nurtured the drive to extend its footprint across the African market. This acquisition provides them their first foreign market expansion, making them a Pan African company with a total number of 147 outlets across Africa and a projection to reach 180 stores by end of 2021.

Group Chief Executive Officer and Managing Director Eat’N’Go Limited, Patrick McMichael said that expanding into East Africa represents a very exciting time in the growth of the organization and also a strategic investment for the firm and its stakeholders. “Over the years, we have fostered the mission to not just bring the best QSR brands to Africa, but to directly impact on Africa’s economy and we are glad we are finally on the way to making this happen. Studying the growth of the Kenyan market in the last couple of years, we are convinced that now is the time to extend our footprint into the country.”

“We are very thrilled about this expansion as this move avails us more opportunity to provide Jobs to more Africans, especially in times like this. We remain thankful to all our customers, partners, and stakeholders who have supported us this far and we are more than ready to strengthen our dedication in satisfying the needs of our customers” Patrick added.

Eat’N’Go has over the years maintained its position as the leading food franchisee in Nigeria. As it expands its presence to other parts of Africa, the organization also places a strong focus on the quality of its products and services of all its three brands. The expansion to this new region is in line with the company’s plan to reach 180 stores across Africa by the end of 2021.

The milestone achievement and development will better position the company in its contribution to Nigeria and Africa’s economy. Currently home to over 3000 staff members across Africa, the company is committed to continuously provide job and business opportunities across the continent.

Eat’N’Go launched in 2012 in Nigeria with the vision to become the premier food operator in Africa. Today, the company has over 147 stores in Nigeria and Kenya and it continues to deliver on this promise by successfully rolling out the globally recognised brands Cold Stone Creamery and Domino’s Pizza across Africa. The company continues to expand its presence in key markets by fusing company goals with new strategic development goals and is projected to reach 180 stores across Africa by end of 2021.

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Brands

Shoprite Exit: LCCI Explains Challenges Hurting Business Operations in Nigeria

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Following the recent announcement of Shoprite, a leading South Africa retail giant, that it is leaving the Nigerian market due to harsh business environment and tough business policies, Dr Muda Yusuf, the Director-General, Lagos Chamber of Commerce and Industry (LCCI) has explained some of the challenges responsible for such decision despite Nigeria’s huge population size.

Yusuf said while such decision is negative for the Nigerian economy, several factors like harsh business environment could have forced the company to make such decision. He said it also could be due to intense competitive pressure.

He said, “Shoprite is an international brand with presence in 14 African countries and about 3,000 stores. The comparative analysis of returns on investment in these countries may have informed the decision to exit the Nigeria market.

“The opportunities for retail business in Nigeria is immense. But the competition in the sector is also very intense.

“There are departmental stores in practically every neighbourhood in our urban centres around the country. There is also a strong informal sector presence in the retail sector. It is a very competitive space.”

According to the Director-General, there are also important investment climate issues that constitute downside risks to big stores like Shoprite.

He said, “These include the trade policy environment, which imposes strict restrictions on imports; the regulatory environment, which is characterised by a multitude of regulators making endless demands.

“There is also the foreign exchange policy, which has made imports and remittances difficult for foreign investors. There are challenges of infrastructure which put pressures on costs and erodes profit margins.”

The LCCI boss added, “But we need to stress that Shoprite is only divesting and selling its shares; Shoprite as a brand will remain. I am sure there are many investors who will be quite delighted to take over the shares.

“It should be noted that there are other South African firms in Nigeria doing good business. We have MTN, Multichoice, Stanbic IBTC, and Standard Chartered Bank, among others. Some of them are making more money in Nigeria than in South Africa.”

He added that some sectors are more vulnerable to the challenges of the business environment than others.

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Appointments

Afrinvest Appoints Mrs. Onaghinon As COO

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Afrinvest West Africa Limited, has appointed the former head of public private partnership agency of the Edo State, Mrs Onoise Onaghinon as its chief operating officer.

Onaghinon joined Afrinvest in 2003 as an analyst in the firm’s investment banking division, rising through the ranks to become an associate, then vice president and eventually executive director & head of investment banking.

She is a seasoned veteran in the Nigerian capital markets and investment landscape with over 18 years of experience in capital raising, mergers and acquisitions, and restructurings across many industries.

In 2017, Onaghinon took a sabbatical from the Firm to head the Public Private Partnership Agency of the Edo State Government. Having acquitted herself creditably in the public sector, she has rejoined the Firm to resume as the new COO.

Speaking on the appointment, group managing director of Afrinvest, Ike Chioke, said: “over the years, Onaghinon has demonstrated great leadership, professional excellence and outstanding client commitment in driving the firm’s business units, particularly our investment banking division. We are delighted to have her back and we look forward to leveraging her cross-disciplinary experience across the Afrinvest group”.

In her new role, Onaghinon will oversee human resources, legal & compliance, internal control and general services while leading the firm’s initiatives to improve efficiency across its subsidiaries.

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