By CHIMA AKWAJA, Lagos
Etisalat International Limited, the Abu Dhabi telecommunications conglomerate which came to Nigeria as the fourth mobile network operator in 2008, announced yesterday that it has finally pulled out of the Nigerian market.
Accordingly, it gave the new investors comprising mainly the 13 lender banks and the Central Bank of Nigeria (CBN) till the end of July to cease using its brand’s name.
Chief executive officer of the Abu Dhabi Company, Hatem Dowidar, said following the emergence of a new Board of Directors and new management for the indebted company, Etisalat has terminated its management agreement with its Nigerian arm and it is having ongoing discussion to provide technical support till the end of three weeks period.
The implication is that the Nigerian telecoms company will be without an internationally recognized brand and technical partner that will easily open doors through its integrity and brand equity.
Apart from making it difficult to make further investment and purchase equipment to drive growth in the network, this would likely cause unfavourable credit terms from telecoms vendors globally.
The CBN and the Nigerian Communications Commission (NCC) last week averted the collapsed of the network after talks with its lenders to renegotiate a $1.2 billion loan failed.
A new reconstituted board was announced last week to run the network. The board is made up of a deputy governor, Financial System Stability of CBN, Dr. Joseph Nnanna (chairman); the new CEO of Etisalat Nigeria, Mr. Boye Olusanya; head of KPMG West Africa Region, Mr. Oluseyi Bickersteth; country business executive leader of PwC Nigeria/West Africa, Mr. Ken Igbokwe and chief finance officer, Mrs. Funke Ighodaro.
Speaking to LEADERSHIP yesterday, the president, Association of Telecommunications Companies of Nigeria (ATCON), Engr. OLusola Teniola, said the major concern that should be before the new CBN-led appointed board and management should be the short, medium and long term survival of Nigeria’s fourth largest mobile network.
Teniola said, “I expect further foreign direct investment (FDI). You know that year-on-year (YoY) foreign direct investment in Nigeria has been going down 80 per cent consecutively. Nigeria is suffering this because there is not enough investment in infrastructure, especially in broadband infrastructure. My thinking is that the new management should solve this problem.
“They need to dig deep and find out why this particular company is not able to resolve the capital funding that was procured through a syndicated loan. If this is not resolved, new investors would find it difficult to find the company attractive. The removal of Etisalat cannot be underestimated. What will replace the Etisalat brand that was able to attract about 20 million subscribers to the network?
“Why was it possible that two major shareholders, Etisalat International and Mubadala were able to walk out of a company they jointly owned? It tells me that there was no amicable resolution. These key questions need to be answered. It behoves on the new management to support the new chief executive officer (a reputable telecom expert in the history of Nigeria) to ensure the survival of the telecom network”.
Alluding to the difficult situation the Nigerian fourth mobile operator faces, National chairman, Association of Licenced Telecommunications Operators of Nigeria (ALTON), Engr Gbenga Adebayo” said the situation is being complicated by scarcity of foreign exchange to the networks, making it very challenging to honour their obligations to foreign vendors as at when due.
Adebayo noted that the Nigerian telecom industry needs urgent attention as the current situation “has occasioned delayed payment to equipment suppliers and other foreign vendors who have now resorted to imposing unfavourable payment terms on telecommunications service providers in Nigeria”.
“Some of the foreign vendors had issued notice of disconnection of service, which could disrupt service availability with attendant impact on customers’ experience”, he added.
Adebayo noted that telecoms equipment procured and imported into the country by operators include RF Coverage Equipment (BTS, BSC, Node B, RNC); Core Equipment (MSC, Media Gateway, RMC, CCN, EMM, Packet Core, MPLS Nodes, etc.); Transmission Equipment (Microwave, Optical Fibre, RF Planning Tools); Customer Contact Equipment (SIM Cards); and Network Tools (Planning tools, Monitoring tools, etc.).
He said, “The equipment is subsequently integrated to form a network to provide services of Voice/Data/SMS/VAS/Enterprise solutions/leased lines- which are finished goods in the Telecommunications Sector. The multiplier effects of efficient and reliable telecommunications services on other spheres of the economy, such as banking, aviation and hospitality cannot be overemphasized.
“The exemption of telecoms equipment and services from items to be accorded priority in the allocation of foreign exchange by the banks has adversely impacted the industry through increased operating cost.
“In the absence of local substitutes for its plant and machinery, the telecommunications service providers are constrained to source foreign exchange from interbank market at higher rates compared to other sectors such as manufacturing, aviation and agriculture accorded priority in foreign exchange allocation at reduced rates by the CBN”.
The major challenge before Etisalat Nigeria is to come up with a new brand identity, logo and a trade which should be registered before the end of the three weeks deadline.
When Vodacom pulled out of the Nigerian market in almost similar circumstance in 2004, Vee Networks (former Econet Nigeria) within 24 hours created Vmobile Nigeria as its trading brand to bridge the vacuum that Vodacom’s sudden exit caused the telecom company.
When Vodacom pulled out of Nigeria, it terminated its plan to inject about $230 million equity investment into Vmobile, which was then branded as Vodacom.
It further severed all links by terminating the Management Agreement it had earlier signed with Vee Network Limited. Many had seen Vodacom’s entry into the Nigerian market, as an attempt to meet up or surpass the performance of its South African rival, MTN.
MTN has been experiencing massive growth and phenomenal performance through its investment in Nigeria. In fact the MTN Group had overtaken Vodacom by becoming the largest mobile network in Africa in terms of subscriber base, revenue and profit, and this has been simply due to MTN’s investments in Nigeria.
Meanwhile other experts in the telecommunications industry have allayed fears over the ongoing transition in Etisalat Nigeria, following the emergence of a new board of directors and management appointed by the Central Bank of Nigeria (CBN) and the lender banks.
They aver averred that the telecoms subscriber should not entertain any fear as the network is merely undergoing a new process of change of name.
Nigeria Remains the Soul of the Business – Etisalat
Meanwhile, Ibrahim Dikko, vice president, regulatory and corporate affairs of Etisalat Nigeria, said yesterday that Emerging Markets Telecommunication Services Ltd (EMTS), trading as Etisalat Nigeria is aware of recent news reports regarding Etisalat Group’s withdrawal of the right to the continued use of the Etisalat brand in Nigeria by EMTS.
He said, “EMTS has a valid and subsisting agreement with the Etisalat Group, which entitles EMTS to use the Etisalat brand, notwithstanding the recent changes within the Company. Indeed, discussions are ongoing between EMTS and Etisalat Group pertaining to the continued use of the brand, and EMTS will issue a formal statement once discussions are concluded.
“The final outcome on the use of the brand in no way affects the operations of the business as our full range of services remain available to our customers.
“EMTS was launched in Nigeria in 2008, with 0809ja to affirm the ‘Nigerianness’ of our origin and sphere of influence. In our nine years of operation, we have remained a prime driver and avid supporter of the Nigerian spirit of excellence, and we will continue to stay true to our ‘Naijacentric’ identity.
“This notion is strongly reflected in our core messages and depicted in major projects and initiatives which we have been known to support. All these initiatives have their foundation embedded in supporting key aspects of the Nigerian fabric: building Nigerian businesses and empowering Nigerians with a focus on the youth”.