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Fresh Hurdles for 9mobile

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9mobile
  • Fresh Hurdles for 9mobile

The last few months, if you will, have been very eventful for Emerging Markets Telecommunication Services Limited (EMTS) which previously traded as ‘Etisalat Nigeria.’ The company passed through the mill in its quest to literally rescue its drowning baby from the murky waters!

Yes, Etisalat Nigeria passed through some kind of evil days and almost fated but for the quick intervention of the Central Bank of Nigeria.

A horse of recall

Etisalat Nigeria had in 2013, obtained a seven-year loan facility of $1.2billion from 13 local banks and their foreign counterparts to refinance a $650 million loan as well as the expansion of its network but the company had missed the payment due to a dollar shortfall in Nigeria’s financial system.

The loan, which involved a foreign-backed guaranty bond, was for Etisalat to finance a major network rehabilitation and expansion of its operational base in Nigeria.

The 13 local banks involved in the loan deal include: Zenith Bank, GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank, Union Bank.

Subsequently, Abu Dhabi state investment fund Mubadala, the second-largest shareholder in the business, had in April presented a final restructuring plan to the banks which they flatly rejected. The banks further gave a one month window for repayment which lapsed in May 31st, 2017.

But following its inability to redeem its payment, the banks issued Etisalat a default notice and sought to take over the company before the Central Bank of Nigeria now intervened.

A comeback bid

But like the proverbial phoenix, it does appear that the fourth largest network is literally trying to get back its life on an even keel what with its new name and brand essence.

At the end of a crucial management meeting of the telecom firm in Lagos, penultimate Thursday, it rallied to move away from the shadows of its troubles by taking a new brand name.

9mobile was unanimously adopted by the company as its new brand name, a move that may have been preempted by the chief executive of Etisalat International, Hatem Dowidar who said Etisalat Group would, in the next three weeks, phase out the brand name in Nigeria.

The decision followed Emirates Telecommunications Group (Etisalat Group) withdrawal of further involvement in the ownership of the Nigerian subsidiary.

Until June 15, the United Arab Emirates, UAE, group was a major shareholder in Etisalat Nigeria, along with United Arab Emirates Sovereign Wealth Fund through Mubadala Development Company, Abu Dhabi.

The two affiliates controlled a combined 85 per cent equity in the telecom firm, with Myacinth holding 15 per cent stake through Emerging Markets Telecommunications Services, EMTS Holding BV, owned by former United Bank for Africa, UBA, Chairman, Hakeem Bello-Osagie.

Opting to part ways with the company followed the crisis in the wake of the $1.2 billion (N377.4 billion) syndicated loan the telecom firm took in 2013 from a consortium of 13 Nigerian banks.

Etisalat Nigeria, Emirates Group disclosed in a filing with the Abu Dhabi Securities Exchange it had transferred 100 per cent of its shares with EMTS Holding BV, a special purpose vehicle established in Netherlands, to United Capital Trustees Limited, legal trustees of the banks.

However, following the resignation a fortnight ago of its immediate past Chairman, Mr. Bello-Osagie, and last week’s reconstitution of the company’s Board of directors, the issue of the trading name the embattled firm would carry brought fresh headache to its management.

EMTS Vice President Regulatory and Corporate Affairs, Ibrahim Dikko, had weighed in with an explanation that the company had a valid and subsisting agreement with its former parent company, to continue using the Etisalat brand regardless of the recent restructuring of the Company.

Mr. Dikko gave a hint as to what the new name of the company could be. He recalled that at the launch of EMTS in Nigeria in 2008, “0809ja” was adopted, to affirm the “Nigerianness” of its origin and the company’s sphere of influence.

Blessed assurance

Following Thursday’s announcement of the new brand name, our correspondent learnt that all staff of the company nationwide were sent notices of the change of name.

Expectedly, on Wednesday the company officially unveiled its new brand identity, 9mobile, with a new logo and website.

The event which was shorn of the usual razzmatazz at such occasion had top members of staff in attendance.

The Chief Executive Officer of 9mobile, Mr Boye Olusanya who addressed reporters at the news conference in Lagos, said with the migration to a new name and brand, 9mobile promised to sustain and continuously provide innovative and value-adding propositions, which it had delivered since inception nine years ago.

He said the new brand identity reflected the bold and creative attributes which the company shared with its valued subscribers.

According to him, the rebranding will enable the company to connect more with its subscribers, especially the youth.

“In our nine years of operations, we have remained at the forefront of innovation and take pride in consistently delivering superior experiences to our subscribers.

“We continue to establish meaningful partnerships with our customers and partners by providing platforms that support their goals and aspirations,’’ he said.

The CEO said that the new name and brand were a deliberate representation and confirmation of its Nigerian heritage.

He said that the new identity was another phase of the telecommunications company’s evolution over nine years of operations in Nigeria.

Olusanya said that though the company’s name and brand changed, the values on which it operated remained the same.

He said that the new logo represented resilience and continuity, particularly of digital technology and continued impact on communication and human interactions.

According to him, being a number-themed logo reflects the network’s futuristic slant.

“With the launch of our new brand, our commitment to providing our subscribers with best-in-class telecommunications services continues. We live in a digitalised world and 9mobile is positioned to deliver more platforms, products and services, using the power of technology.”

Olusanya said that over the years, the telecommunications company had built a strong network, which better-positioned 9mobile to continue delivering innovative solutions.

He said that the values of innovation, customer-centricity and quality of service remained its guiding principles, even as the new management focused on driving efficiency and steering growth.

The CEO while acknowledging that the task to get the changes under way was no doubt easy, however attributed the seamlessness of the task to the responsiveness of its staff, who according to him made the difference.

The tasks ahead

It is however instructive to note that the telco still faces a number of challenges ahead, which may make or mar its growth plans if not addressed headlong.

Speaking with a cross-section of industry experts they told our correspondent that the telecoms network needs to step up its game in its quest to remain relevant in the sector.

Speaking in an interview, Mr. Olusola Teniola, National President, Association of Telecommunications Companies of Nigeria (ATCON) said, “Full rebranding of Etisalat over the period under new management can be from $100m and above. However, if 9mobile is viewed as a temporary brand name that is in transition awaiting another buyer, then in my estimates, a figure much lower than $100m can be used to rebrand 9mobile over all its customer care centers and kiosks, stationary, bill boards and a very light touch of below the line awareness that doesn’t include SIM card / recharge card rebranding.”

The ATCON boss was also quick to add that the potential in the industry is enormous and any new investor has the opportunity to define and shape the future of this dynamic industry.

Echoing similar sentiment, the Managing Director/CEO Prima Garnet Africa, Laolu Akinwunmi who acknowledged the fact that the cost of rebranding the network could not be summed up without proper due diligence analysis, said depending on the scope and breadth, a rebranding exercise will not come really cheap.

Akinwunmi who is also former Chairman Advertising Practitioners Council of Nigeria (APCON) however admitted that the cost of rebranding will be in the region of several millions of dollars.

Besides funding, The Nation gathered that the company may also faced the arduous task of maintaining its steady subscribers on its network as existing and prospective subscribers are pulling out.

At the last count, the number of subscribers that have abandoned the network, following the crisis it had as a result of its inability to repay a $1.2 billion loan facility it obtained from a consortium of banks, has increased to over 3.5 million.

It was gathered that the event on the new brand unveiling, held at its Lagos headquarters, was a departure from the flamboyant nature with which the telco was known when having similar major events in the past nine years of its operations in Nigeria.

From over 22 million subscribers in the past months, Etisalat subscribers has crashed to 18.5 million, this represents a loss of over 15 per cent of its total active subscribers as at May, this year, data obtained from the Nigerian Communications Commission (NCC) revealed.

Also, 9mobile’s (as Etisalat Nigeria is now known) market share, which had reached 15 per cent dropped to 12.76 per cent, at the end of May.

MTN currently has 54.9 million subscribers; Globacom, 37.3 million while Airtel has 34.1 million with their market shares standing at 37.8 per cent, 25.7 per cent and 23.5 per cent respectively.

Already, Chief Executive Officer, 9mobile, Mr. Boye Olusanya, has confirmed the poor financial state of the telecoms company, little wonder he said, the telco ‘is still open for investors’ in order to put the company fully back on track, even as he disclosed that the company is now positioned to offer more value to subscribers still remaining on its network while working to attract new customers.

With the migration to a new name and brand, Olusanya said 9mobile was seeking to sustain and continuously provide innovative and value-adding propositions which it has delivered since inception nine years ago.

On the growing fears over job security, Akinwunmi said this may not be much of a problem. The new management, he noted, “Is very solid and as you can see from their prompt response to the name change, also competent. However, at the end of the day, the decision on what to do with jobs is with the board and senior management.”

While commenting on the public acceptability, he said this will be a function of many factors. “It will be at different levels. Quality of services is one. If the customers continue to enjoy the same quality of call services, VAS etc there will be no problems I am sure the public will accept the new brand.”

Lending credence to Akinwunmi’s point, Teniola while noting that the customer is king in this industry and the segment of the market that spoke to Etisalat’s success would and should be the area that 9mobile should hold dear to its strategic intent. “It is our view in ATCON that all our members adhere to a Business Code of Ethics that treats the consumer in a proper manner and if EMTS rebranded as 9mobile adheres to these sets of principles we believe public acceptance will continue to exist.”

In the view of Teniola, “Once the new management is able to return the underlying operations of EMTS to a profitable position that allows its financial performance to cover its full current obligations to its creditors, especially in the form of ‘interest rate coverage’ then the issue of job losses may be kept to a minimum.”

On addressing investor apathy, Teniola said it could be addressed if the new crop of management plays by the rules. “The CEO of 9mobile has stated that the company is open to willing investors. This statement demonstrates that the lenders controlling the company are willing to enter into discussions with new investors willing to turnaround this promising company. The potential in the industry is enormous and any new investor has the opportunity to define and shape the future of this dynamic industry. A lot of innovative solutions are waiting to be introduced to totally transform the way the existing value chain has been created to address the voice market and needs to be changed to truly address the digital realm.”

In his own assertion, Oluwadare Ogunyombo, a marketing communication expert also holds the view and very strongly that the telco needs to gird up its loins so as to turn the tide. This, he said, becomes inevitable if the idea is to remain relevant. Pray, is someone listening?

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.

Commodities

Economic Strain Halts Nigeria’s Cocoa Industry: From 15 Factories to 5

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Once a bustling sector, Nigeria’s cocoa processing industry has hit a distressing low with operational factories dwindling from 15 to just five.

The cocoa industry, once a vibrant part of Nigeria’s economy, is now struggling to maintain even a fraction of its previous capacity.

The five remaining factories, operating at a combined utilization of merely 20,000 metric tons annually, now run at only 8% of their installed capacity.

This stark reduction from a robust 250,000 metric tons reflects the sector’s profound troubles.

Felix Oladunjoye, chairman of the Cocoa Processors Association of Nigeria (COPAN), voiced his concerns in a recent briefing, calling for an emergency declaration in the sector.

“The challenges are monumental. We need at least five times the working capital we had last year just to secure essential inputs,” Oladunjoye said.

Rising costs, especially in energy, alongside a cumbersome regulatory environment, have compounded the sector’s woes.

Farmers, who previously sold their cocoa beans to processors, now prefer to sell to merchants who offer higher prices.

This shift has further strained the remaining processors, who struggle to compete and maintain operations under the harsh economic conditions.

Also, multiple layers of taxation and high energy costs have rendered processing increasingly unviable.

Adding to the industry’s plight are new export regulations proposed by the National Agency for Food and Drug Administration and Control (NAFDAC).

Oladunjoye criticized these regulations as duplicative and detrimental, predicting they would lead to higher costs and penalties for exporters.

“These regulations will only worsen our situation, leading to more shutdowns and job losses,” he warned.

The cocoa processing sector is not only suffering from internal economic challenges but also from a tough external environment.

Nigerian processors are finding it difficult to compete with their counterparts in Ghana and Ivory Coast, who benefit from lower production costs and more favorable export conditions.

Despite Nigeria’s potential as a top cocoa producer, with a global ranking of the fourth-largest supplier in the 2021/2022 season, the industry is struggling to capitalize on its opportunities.

The decline in processing capacity and the industry’s current state of distress highlight the urgent need for policy interventions and financial support.

The government’s export drive initiatives, aimed at boosting the sector, seem to be falling short. With the industry facing over N500 billion in tied-up investments and debts, the call for a focused rescue plan has never been more urgent.

The cocoa sector remains a significant part of Nigeria’s economy, but without substantial support and reforms, it risks falling further into disrepair.

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Energy

Nigeria’s Power Sector to Get $7.5bn from $30bn African Electrification Initiative, Says Minister Adelabu

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Power - Investors King

Minister of Power Adebayo Adelabu has said that Nigeria is set to receive a portion of a $30 billion investment aimed at electrifying Africa.

During a visit to Splendor Electric Nigeria Limited, Adelabu revealed that the World Bank and the African Development Bank (AfDB) have committed to this ambitious initiative with Nigeria slated to receive approximately $7.5 billion, or 25% of the total fund.

The groundbreaking initiative is designed to extend electrification to an additional 300 million Africans over the next five years.

This large-scale project aims to address the energy deficit that has long plagued the continent and is expected to transform the power infrastructure significantly.

Adelabu expressed optimism about Nigeria’s role in the project, citing the country’s large population and ongoing power sector reforms as key factors in securing a substantial share of the funds.

“I want to inform you of the proposal or the intention, which is at an advanced stage, by the World Bank and the African Development Bank to spend about $30 billion to extend electrification to an additional 300 million Africans within the next five years. Nigeria is going to participate fully in this. I am confident that nothing less than 20% or 25% of this fund would come into Nigeria because of our population,” Adelabu stated.

The minister’s visit to Splendor Electric Nigeria Limited, a porcelain insulator company, underscores the government’s commitment to involving local businesses in the electrification drive.

The investment will focus on enhancing and upgrading power infrastructure, which is crucial for improving electricity access and reliability across Nigeria.

Despite the promising news, Nigeria continues to face significant challenges in its power sector. The country’s power grid has suffered frequent collapses, with the Nigerian Bureau of Statistics reporting less than 13 million electricity customers and frequent nationwide blackouts.

The International Energy Agency highlighted that Nigeria’s national grid experienced 46 collapses from 2017 to 2023, exacerbating the nation’s energy crisis.

To combat these issues, the government is also advancing the Presidential Power Initiative, a project in collaboration with Siemens, which aims to build thousands of new lines and numerous transmission and injection substations.

Adelabu noted that the pilot phase of this initiative is nearing completion and that Phase 1 will commence soon.

With over 200 million people and a chronic energy shortfall, Nigeria’s power sector is in urgent need of overhaul.

The additional $7.5 billion from the African Electrification Initiative represents a critical step toward achieving reliable and widespread electricity access.

The investment is expected to stimulate not only infrastructure development but also economic growth, creating opportunities for local companies and improving the quality of life for millions of Nigerians.

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Crude Oil

Oil Prices Climb as Markets Eye Potential US Rate Cuts in September

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Crude oil - Investors King

Oil prices rose during the Asian trading session today on speculation that the U.S. Federal Reserve may begin cutting interest rates as soon as September.

Brent crude oil, against which Nigerian oil is priced, increased by 32 cents to $82.95 a barrel, while U.S. West Texas Intermediate crude oil climbed 34 cents to $80.47.

The anticipation of rate cuts stems from recent U.S. inflation and labor market data indicating a trend towards disinflation and balanced employment, according to ANZ Research.

The Federal Reserve is set to review its policy on July 30-31, with expectations of holding rates steady but providing clues for potential cuts in September.

The potential rate cuts could stimulate economic activity, increasing demand for oil. This optimism has been partially offset by recent concerns over China’s slower-than-expected economic growth, which could dampen global oil demand.

President Joe Biden’s announcement to not seek re-election and endorse Vice President Kamala Harris had minimal impact on oil markets.

Analysts suggest that U.S. presidential influence on oil production is limited, although a potential Trump presidency could boost oil demand due to his stance against electric vehicles.

In response to economic challenges, China surprised markets by lowering key policy and lending rates. While these measures aim to bolster the economy, analysts remain cautious about their immediate impact on oil demand.

With OPEC+ production cuts continuing to support prices, the focus remains on the U.S. Federal Reserve’s next moves.

Any decision to cut rates could further influence oil prices in the coming months, highlighting the interconnectedness of global economic policies and energy markets.

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