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9Mobile: NCC’s stress test on Teleology Holdings placing cart before the horse?

 

…As two shareholding firms remind NCC, CBN of Court Order barring sale 

Though there has been nothing suggesting that there is a surreptitious move to edge out Teleology Holdings Limited in the takeover of cash-strapped 9mobile after it had been named the preferred bidder by the bid handling firm, a lot of analysts say the ongoing technical and financial stress test by the regulator amounts to placing the cart before the horse.

The Executive Vice Chairman of Nigerian Communications Commission (NCC), Prof Umar Danbatta had earlier in the week averred that it is conducting another round of due diligence on the preferred bidder for 9Mobile, Teleology Holdings Limited.

According to him, the due diligence will determine whether the bid winner has the technical capacity as well as the financial resources to successfully run the beleaguered telecommunications company.

Analysts argue that if the NCC has any need to reconduct stress test after a bid winner had been announced, it amounts to looking for a bad name for the dog to hang it after successfully winning a race.

Wood AD
Adrian Wood, promoter of Teleology Holdings Limited, new possible owners of 9mobile

According to them, by subjecting Teleology Holdings to another stress test after similar test had been done by Barclays Africa who the same NCC approved as the bidding hander tends to suggest apparent change of goal post when an untargeted winner is about to emerge.

Otherwise, they see the second scrutiny as a possible elimination by substitution if the report of the test turns out to mean that Teleology failed.

Danbatta added in an interview that “NCC would soon report to its board on the result of the due diligence,” stressing that “the preferred bidder must fulfil all necessary conditions before it would be allowed to take over 9mobile, formally known as Etisalat”.

“There are issues but let me say we are almost done with sorting out those issues. We are presently conducting another round of due diligence on Teleology: to examine and consequently determine whether they really have the technical wherewithal to run the company effectively; and whether they really have financial capability to run well and so on.”

NCC had in April told journalists that Teleology had made the initial payment of $50m for 9Mobile, adding that the preferred bidder had less than 90 days to pay the remaining 90 per cent or $450m.

However, the regulator added recently that failure by Teleology to pay the remaining $450m on schedule would make it to lose the spot to the reserved bidder, Smile Communications.

Besides, another tactical strategy to outsmart Teleology is the position of a section of the shareholders of 9Mobile who have cautioned the Central Bank of Nigeria (CBN), the NCC and others involved in an ongoing negotiation to sell the telecommunication firm not to proceed with the transaction in view of a pending case before the Federal High Court in Abuja.

It would be recalled that in April this year, two key shareholders, Afdin Ventures Limited and Dirbia Nigeria Limited had approached a federal high court seeking involvement in the entire sale process based on their stake valued at $43m.

Accordingly, they warned of the legal consequences to the CBN and others should they proceed to conclude the sale of the network despite a subsisting order of the court, halting further activities in relation to the sale of the telecommunication firm.

Both aggrieved shareholding firms promoted by businessman, Dahiru Mangal, issued the warning on Thursday in letters written by their lawyer, Mahmud Magaji (SAN), to the six parties said to be involved in the transaction.

Despite the duo of CBN and NCC, others whom the letter were addressed to are Etisalat International Nigeria Limited, Karlington Telecommunications Limited, and Premium Telecommunications Holdings NV and First Bank of Nigeria Plc.

Both part owners said their action is a response to a recent media report credited to Mr. Boye Olusanya, the CEO of 9mobile to the effect that “9mobile’s board was pleased with the progress made thus far and expects the acquisition process to be concluded as soon as possible.”

Justice Binta Nyako had on April 17 gave an order, directing “the maintenance of status quo as at today” in the suit number FHC/ABJ/CR/288/2018, filed by Afdin and Dirbia

Both shareholders claimed that having invested funds estimated at $43,330,950, they ought to have been in the know of the entire sale process to avoid chances of losing their investments after sales.