The bidding process for the acquisition of 9mobile seems to be at an end. Reports from Thisday and The Guardian confirm that Barclays Africa, the financial services company in charge of the bidding process for 9mobile, has sent an official letter to Teleology Holdings Limited, confirming it as the preferred bidder in the sale of the struggling telco. This could be an end to months of speculation and messy court cases. But most importantly, we have to consider how we got here and how to ensure we are not back in this position a few years from now.
Etisalat Nigeria, which was renamed 9mobile some months ago, was put up for sale after it plunged into crisis almost a year ago. Abu Dhabi’s Emirates Telecommunications Corp. had defaulted on a $1.2 billion loan and a consortium of 13 banks and seized control of 45 percent stake in the company. The Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) had to step in to avert a complete collapse of the company with about 4,000 employees and 17 million subscribers. The collapse would have imperilled the nation’s already fragile economy. In a recession where numerous people were losing their sources of livelihood, 4,000 people losing their jobs would have been a lot for the country to bear.
Although some have blamed the deterioration of the exchange rate for the sudden collapse of the telecom giant; the impending doom in the Etisalat management could have been avoided if regulators had performed periodic checks on the welfare of the company. The intervention from CBN and NCC were rather reactive actions when preventive measures could have been taken instead.
Mr Sunday Dare, the Director, Stakeholders’ Management at the NCC, admitted this at an event organised by the commission last year. “In order to avert a repeat of the 9mobile experience, the NCC has set up a team of financial experts that are currently checking the financial books of telecom operators in the country. The team also comprise of technical experts that will check the technical status of the networks in order to ascertain the technical fitness of the networks in terms of call success rates and service quality.”
Nigeria’s telecommunications regulator, NCC, has since started taking steps by ensuring tougher checks are carried out on the biggest mobile-phone companies in the country. In a recent interview with Bloomberg, Umar Garba Danbatt, the Executive Vice-Chairman of NCC, said the commission compiled reports on the financial well-being of the local units of MTN Group Ltd., with the largest market share of 52.3 million customers, Bharti Airtel Ltd. and Globacom Ltd. The regulator has identified some areas of concern and these are “issues that can be addressed,” he said. This approach could serve as one of the preventive measures to avoid a repeat of last year’s collapse of debt-laden Etisalat and help restore balance to the industry.
We can also learn from one of the rules set by federal regulators in the United States after the collapse of major corporations like Lehman Brothers in the financial crisis of 2008. The regulators set a rule for companies to spell out plans for unwinding their business through bankruptcy should they fall on hard times. This amounts to what is seen as a plan B; a roadmap for how the company can be wound down through a bankruptcy process. This will ensure a comprehensive and coordinated resolution plan for its holding company, staff and affiliates in the event that a company defaults on its loans.
Also, in the bidding process for 9mobile that involved Teleology Holdings Ltd. and Johannesburg-based data provider, Smile Communications, we hope the Central Bank had ensured due process and carried out a thorough financial check of the winner of the 9mobile auction; and that the NCC have audited the capability of the alleged winner, Teleology, to deliver quality service to Nigerians.
According to Thisday, an official letter was sent to Teleology Holdings on Wednesday, February 21, directing them to make a non-refundable cash deposit of $50 million within 21 days or lose the bid to Smile Communications Limited. This report, however, is yet to be confirmed by either the NCC or Barclays Africa.