CBN to conduct financial check on 9mobile buyer
Written by Henry on February 23, 2018
The Central Bank of Nigeria is to carry out a financial check of the winner of the 9mobile auction while the Nigerian Communications Commission will focus on the buyer’s ability to provide quality service, the Executive Vice-Chairman, NCC, Umar Danbatta, has said.
“These are all measures we’re putting in place to ensure the survival of 9mobile and prevent a repeat of what happened,” Danbatta said in an interview with Bloomberg in Kano.
Two companies are vying to take over the embattled operator in a process that the NCC hopes will be concluded by the end of March.
According to unconfirmed media reports, Teleology Holdings Limited and Johannesburg-based data provider, Smile Communications, are the remaining bidders.
Both companies declined to comment. Barclays Africa was appointed as sale adviser, the NCC said in November.
The NCC said tougher financial health checks on the country’s biggest mobile phone companies could prevent a repeat of last year’s collapse of debt-laden Etisalat and help stabilize the industry.
Danbatta said the NCC had compiled reports on the financial well being of the local units of Johannesburg-based MTN Group Limited, the market leader with 52.3 million customers, Bharti Airtel Limited and Globacom Limited.
According to him, the regulator has identified some areas of concern and these “issues that can be addressed.”
Etisalat Nigeria, which has been renamed 9mobile and is for sale, plunged into crisis almost a year ago.
A consortium of banks seized control of a 45 per cent stake from Abu Dhabi’s Emirates Telecommunications Corporation. after it defaulted on a $1.2bn loan.
The CBN and the NCC stepped in to avoid the collapse of the company, which employs 4,000 people and has about 17 million subscribers, down from 19.6 million at the end of March.
“Time is of essence,” the President of the Association of Licensed Telecommunications Operators of Nigeria, Gbenga Adebayo, said.
“They can only get good value for this company for as long as it has good business,” he added.
Nigerian companies have suffered since the 2014 oil price crash triggered an economic contraction and sent corporate earnings plunging.
Rampant inflation reduced consumers’ purchasing power and the central bank’s tightening of capital controls led to a shortage of dollars, which companies need to pay for imported equipment and service foreign-currency loans.
The naira lost more than half its value against the greenback in that period.
Foreign investments in the telecommunications sector dropped 86 per cent to $33.6m in the third quarter of last year, compared to the same quarter the previous year, according to data from the Nigerian Bureau of Statistics.
Etisalat Nigeria would still be here, “but for the deterioration of the exchange rate,” Danbatta said.
He added, “The NCC will continue to put in place flexible regulations that will ensure the survival of telecommunications companies in the marketplace.”