By Diana Ojua
The 9Mobile, operated by Emerging Markets Telecommunications Services Limited (EMTS), remains on course even though certain caucuses of the telecoms sector have been making a hullabaloo to the contrary. News story after news story in recent weeks appears to be out to achieve one aim: truncate the efforts made till date to prevent one of the four major Mobile Network Operators in Nigeria from collapsing.
The Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC), have jointly, in their roles as regulators, opted for an innovative approach to dealing with a distressed company, which 9Mobile’s predecessor, Etisalat had become when investment from Mubadala Group, Etisalat International brand pulled out of Nigeria.
Heavily indebted, the glaring option would have been for EMTS to close shop, throw 4000 employees into the unemployment queue, disconnect 22 million Nigerian subscribers and collapse the network of competitors that would have struggled to absorb these subscribers at short notice and jeopardize businesses that run on the network.
Of the companies that indicated interest, five made it to an advanced stage. One pulled out of the acquisition bid, two were dropped for not including financial offers in their bids leaving Smile Telecoms and Teleology Holdings Limited, which made offers, as the last two standing.
Financial advisor to the transaction, Barclays Africa, after its analysis of the offers named Teleology as the preferred bidder. By default, Smile became the reserve bidder, waiting in the wings to snatch 9Mobile where the preferred bidder is unable to meet up with its obligations for the phased payment. Teleology however met the first timeline by paying the initial $50million deposit within the stipulated timeframe.
This development that should have spurred confidence has however become a source of contention as a media war rages. The war initially began as what CBN and NCC described as “speculative reports” that members of the public must “take with a pinch of salt”. At another point, the regulators were compelled to issue a warning to the parties to the transaction to desist from leaking information about the processes leading up to the sale. Those warnings came before Smile showed its hand as being behind the media campaign.
Once Teleology paid the $50 million deposit Smile became more frontal in its attack on the process, which it previously had no cause to complain about until it was named a reserved bidder. It placed out news stories that question the integrity of the process while its officials grant interviews that all but declare Smile as the rightful bidder.
A letter from the Chairman of NCC Governing Board, Senator Olabiyi Durojaiye, to CNB Governor, Mr Godwin Emefiele, was reportedly leaked with the active facilitation of Smile. A source that is familiar with the transaction said Smile was banking on the Senator Durojaiye’s assertion that the eventual buyer of 9Mobile must have at least three years operational history, something that other industry watchers suggested can be easily taken care of by Teleology signing on a technical partner.
The latest salvo fired by the Smile team is a syndicated news report in which it alleged that Teleology only offered $301 million as opposed to $500 million, which leaves a balance of $251million to be paid and not the reported $450 million that has to be paid 90 days from the payment of the initial deposit. The logic for Smile is that since it offered $300 million, $1 million shy of Teleology’s offer, it should be allowed – with the benefit of its operational experience to be the preferred bidder.
*Another source familiar with the transaction revealed that the prevailing expectation at Smile is that the barrage of bad publicity driven by the company will force CBN and NCC to back off and hand over the company to Smile and not Teleology.*
“The people at Smile know that the public is not too familiar with the technicalities of the process. What Barclays did was to analyse the bids and opted for the best-case scenario. Let us not forget that part of what is at stake here is that creditors to Etisalat, the consortium of commercial lenders, are entitled to recover their funds; in addition to whatever money is on the table, Teleology has something in its offer for these creditors and even vendors that are also being owed, so, if the financial advisor adjudge that this is in the better interest compared to Smile’s offer that is short of trying to buy the company as scrap where is the bad blood coming from then?” The source questioned.
TheNigerian gathered that Smile is banking on the leverage of “powerful people in government” to bypass the regulators and have its way. Its senior officials reportedly constantly update these people in government about the strategies being deployed to frustrate the sale to the preferred bidder while requesting assurances that its position as reserve bidder would be activated once this is achieved.
An industry expert, Tunde Arowojobe, told TheNigerian that “the game being played by Smile has far reaching implications that will reverberate beyond the telecoms sector. If this company is allowed to force a reversal as it is trying to do, then companies will have a hard time securing mid and long-term financing for their projects since commercial lenders will not see value in collaterals that they could be forced by regulators to trade for rock bottom prices to buyers that do not meet their prime conditions.
“What Smile has simply done is to exploit that caveat about only selling 9Mobile to a buyer with cognate operational experience and the laughable thing is that this company does not even have experience on the scale that 9Mobile currently operates,” he noted as he warned that the disasters that the regulators have avoided till date may still occur if negative press about the process is not immediately halted.
Meanwhile, another source from within the financial sector suggested Smile might have committed crimes in pursuit of its agenda saying that the kind of information it is leaking out about the sale could only have been possible with active use of industrial espionage. “The company seems to have a mole within Teleology Holdings that provides accurate details of communications that it should otherwise have no access to. Whether there are also moles within CBN and NCC doing the same thing is another point to ponder,” Arowojobe said.
The CBN and NCC continue to insist that the process is on course and that they are poised to step up their interventions should the need arise.