9mobile Acquisition Shaky As Investors Chase Duke, Sanusi, Udoji

There are indications that Teleology winner of the 9mobile bid is making overtures to some powerful Nigerian politicians and business moguls for funding of the acquired network.

Teleology Holdings Limited recently became the preferred winner of a reportedly controversial bid for 9mobile, formerly Etisalat.

9mobile has been in debt crisis since last year.

A reliable source told DAILY INDEPENDENT that the preferred bidder, Teleology Holdings Limited, was only using Adrian Wood, a former chief executive officer of MTN Nigeria who helped built the Nigerian arm of the South African telecoms group into the largest mobile phone operator in Nigeria, with a 36.1 percent market share as a front.

The company, the source said, as a special purpose vehicle (SPV), was formed by Adrian Wood, some wealthy Nigerians, and foreign stakeholders in collaboration with Ericsson.

“This is not the first time Adrian Wood would be used as a stand-in to bid for a Nigerian business.

“When the defunct national carrier, Nigeria Telecommunications Limited (NITEL), was put up for sale, Adrian Wood was behind one of the companies, Brymedia West Africa Limited, bidding for it.

“The difference is that the company was operating under a different name and not Teleology

“I guess it was because of these powerful people behind the Adrian Wood-led Teleology that the $50 million payment date of the preferred winner of the bid was altered.

“To my understanding, the company ought to have paid the 10 percent of the $500 million immediately it emerged as winner, but as it stands today, a three-week deadline had been given to Teleology to pay”, he said.

Also speaking on the development, a stakeholder in the industry, who preferred anonymity, doubted if the plan to acquire 9mobile would sail through.

He said the enormous issue of debt would be a major challenge for any investor that succeeds in acquiring the network.

“I think it is too early to think that 9mobile has been acquired.

“As an industry insider, we all know how hard it took for NITEL to be bought. There were back and forth activities before it was eventually acquired.

“Up till now, nothing much has been achieved by the new owners.

“I can tell you that the sale of 9mobile will not be easily completed as some people think.

“The reason is largely due to the debt issue. More so, the industry’s market is getting tougher by the day because of the economic situation in the country”, the stakeholders noted.

Besides the board members of Teleology, who are all out to contribute to the realisation of the acquisition financially, three Nigerians are reportedly being swayed to be major investors in Teleology’s acquisition and operations of 9mobile.

They are Donald Duke, former governor of Cross River State; Muhammadu Sanusi II, former governor, Central Bank of Nigeria (CBN), now the 14th Emir of Kano.

The third person – according to the source – is business mogul, Chief Oscar Udoji, founder and Chief Executive Officer of Solgas Petroleum and Udoji United Football Club.

Udoji also served as the National Chairman for the Congress for Progressive Change (CPC), the political party which finished as runners-up in the 2011 presidential elections with President Muhammadu Buhari, its presidential candidate then.

DAILY INDEPENDENT gathered that the trio has been approached for investment but that there had been no concrete agreements and compromise over the proposals between them and Teleology which had put up a Plan B should the potential Nigerian investors so far approached remain undecided for too long.

Efforts are said to have been made for offshore funding of the business with some foreign banks from the Middle East factored into the acquisition deal.

However, industry observers posit that the chances of foreign banks investing in the Teleology deal was very slim because of the fresh memory of the $1.2 billion debt hanging on 9mobile (then Etisalat).

The deadline of 21 days given to Teleology to pay the initial deposit of $50 million, which was kicked against by reserved bidder, Smile Communications, is fast approaching.

The outcome of the push for the Nigerian investors to give a nod to the company’s crave is expected to determine the payment of the $50 million, 10 percent of the $500 million the preferred bidder has to pay this month.

Some industry analysts argue that Teleology has no financial capacity or weight to acquire and operate 9mobile efficiently and effectively on its own.

Adrian Wood was the second CEO of MTN Nigeria. He managed the company from 2001 to 2004, after the first CEO, Karel Piennar.

Technically, the former CEO of MTN Nigeria is seen as the man that has what it takes to drive and bring back troubled 9mobile to life.

An economist, Adrian Wood has degrees from Cambridge and Harvard universities.

The board members of Teleology are Sven-Axel Brudnicki, Group CEO; Michael Ikpoki, first Nigerian CEO of MTN Nigeria, who is the Legal and Regulatory, Sales and Distribution Director of Teleology, while the former Chief Technical Officer of MTN Nigeria, Demola Elesho, is the Chief Technical Officer of Teleology.

Others are Kemal Shefik, Chief Financial Officer; Paul Crosa, Sales, Marketing, MFS, Commercial Strategy; Richard Noren, Procurement, Supply Chain, Systems Manager, among others.

Last year, the Etisalat Group, parent company of Etisalat Nigeria, informed the Abu Dhabi Securities Exchange that a group of Nigerian commercial banks had refused to agree to the restructuring of N541.8 billion debt owed by the company.

Prior to the eventual bidding of 9mobile, there were discussions with the group of Nigerian commercial lenders to find a non-disruptive solution to the $1.2 billion debt.

Etisalat obtained a $1.2 billion syndicated loan, in 2013, from a consortium of 13 Nigerian banks, including Access Bank, Zenith Bank, GTB, FirstBank, Fidelity Bank, FCMB, Stanbic IBTC, Ecobank, United Bank for Africa (UBA), and Union Bank.

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

As at last year, 9mobile (then Etisalat Nigeria) paid about half of the initial loan (about N504 billion), according to official figures, with total outstanding sum of about $574 million, consisting $227 million and N113 billion – if the naira portion was converted to U.S. dollars.

Etisalat failed to meet its agreed debt servicing obligations with the banks since 2016 which prompted the banks to report the matter to Nigerian Communications Commission (NCC), and Central Bank of Nigeria demanding to recover the loan or take over the company.

On March 10, 2017, the intervention of the NCC and CBN succeeded in persuading the banks to suspend their threat to take over Etisalat, after all parties agreed to restructure the loan, with May 31, 2017 as the new repayment deadline.

Again, Etisalat failed to meet the deadline. Further negotiations later collapsed, resulting in the banks issuing a final defaulting note and enforcement notice on June 9, 2017 to Etisalat, to commence the process to take over Etisalat after it reneged on the agreed repayment deadline, effective June 15, 2017, until NCC and CBN intervened.

Late 2017, the financial and telecommunications services regulators received bids from about five bidders in the sale of 9mobile.

The shortlist included Teleology Holdings Limited; Smile Telecoms Holdings, a telco operating in Nigeria, Tanzania, Uganda, Congo DR and South Africa; and Helios Investment Partners LLP, an investment company.

Others were Bharti Airtel, an Indian telco that owns Airtel Nigeria, and Globacom owned by Mike Adenuga, Jnr.

Since the debt issue, 9mobile has lost subscribers. In October, it had a record of 17.1 million users, a 12.2 percent market share, down from 20 million subscribers, or 14 percent share, earlier in 2017, according to the telecoms regulator.  (Daily Independent)