We can reveal to you that the Mubadala Development Company (MDC), owned by the government of Abu Dhabi, United Arabs Emirate is Nigeria as you read this piece are here in Nigeria to try and save their brainchild, Etisalat Nigeria. After nurturing Etisalat to this point, sources says the group and by extension, the government of the Abu Dhabi in the United Arab Emirates has decided not to let the company die easily. The Mubadala Group always has the deep pocket to keep Etisalat Nigeria afloat despite its financial problems, but as a business venture, they have been careful to make sure they are not doing so at a loss.
Etisalat Nigeria has looked onto the Mubadala Group as the last hope to keep afloat after running into problems with Nigerian creditors along with foreign parners, including a consortium of banks in the country. This cash crunch has spurned the talks of possible receivership of the telecommunications company by these creditors after Etisalat failed to meet deadline in servicing its loans.
Meanwhile, the Mubadala Group has continued to have series of meetings around the country to straighten things out. We are privy to information that the officials of the group have already met with top government functionaries in the ministry of communications technology as wells as the Nigerian Communications Commission (NCC) in Abuja. The Group has also had a meeting with a consortium of Nigerian banks to iron things out and try to restructure the loan.
There have been conflicting stories coming from the house of Etisalat since it ran into financial murky waters a few months ago. The company has fought to stave off the stories that it is not in some deep financial trouble by issuing some forward-looking statements and waving off negative stories about its financial situation. It is understandable that a business entity, the company is wont to present a positive front as much possible but is quite apparent to the average observer of the Nigerian telecommunications market that all is not well with the company, financially.
Speculations have been rife in the past two months that the Mubadala Group has not been happy with the performance of Etisalat Nigeria and has therefore been very willing to divest its investment in the company by offloading its share to the highest bidder. This was not necessary because Etisalat has not been in profit but because the group felt that the troubles were too much for the revenue it earns from the company. Hence, the idea that Mubadala decided to stay back in the United Arab Emirates and watch Etisalat Nigeria go down the drain.
Perhaps, if the banks could have their way, Etisalat Nigeria would have been taken over by now by receiver managers. A little over two months ago, the banks began a process to take over the company. However, the Central Bank of Nigeria and the Nigerian Communications Commission were quick to come to the aid of the telecommunications outfit. This is more so as the government fully realizes that part of the reasons Etisalat missed a payment deadline was as a result of the general outlook of Nigerian economy in general and shortage of foreign currency exchange in particular.
The bone of contention between Etisalat and the banks has been a loan of between $1.2 billion and $1.75 billion which Etisalat wanted part of it converted to naira, since the shortage of United States Dollars was not its own making. The bank would have none of it as they refuse that plan, perhaps with the knowledge that the parent company, Mubadala Group is well capable of refinancing the loan as a deep pocketed state-owned conglomerate. What the banks seem to forget was that the shortage of United States dollars hitting Nigeria is also taking its toll on the United Arab Emirate as that country also relies on oil as a significant part of its export revenue.
Hence, the Mubadala Group has been peeved by the position of the banks and almost decided to divest from the Nigerian market which would have led to the inevitable crumbling of Etisalat Nigeria. The federal government also decided to intervene to try to save Etisalat Nigeria as its fall would have exacerbated the economic recession from which Nigeria is trying to exit from.
The weakness of the naira has hit the Etisalat lenders so hard that they are getting less than they are getting less than they bargained for after the Naira lost more than 50 percent of its value in the last few years.
With A subscriber base of 20 million people, Etisalat Nigeria is the fourth largest telecommunications operator in Nigeria and the economy would have suffered another blow if the network crumbled suddenly. After some form of foot-dragging, the Mubadala Group finally decided to come in to save the subsidiary. The Group owned about 40 percent equity in the company which generates about 3.7 percent of its annual revenue. Perhaps the Mubadala Group realizes that it cannot easily offload over 40 percent equity at this time.
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