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Etisalat’s 18.5m subscriber base bad for foreign buyers, good for Glo—BH Analysis

Contrary to speculations that Etisalat Nigeria loan default crisis will finally terminate with foreign investors coming to acquire its assets and liabilities, analysis of facts and figures on ground has shown that the possible deal in this circumstance is merger with a local operators.

A study carried out by Business Hilights Economic Research Team (BHERT) has suggested that foreign investors are more interested in entities that have good market share and community acceptability so that it will be easy for them to put in money, technology so as to enjoy enviable position than investing to begin battle for survival from day one.

For example, Etisalat is the lowest of the four major GSM companies in terms of subscriber base with just 12.76 per cent market share on 18,500,772 subscribers according to data gathered from the website of the telecoms regulator, the Nigerian Communications Commission (NCC).

Industry analysts say the market statistics of the company may not be very attractive to international buyers when they place the figures side by side with the $1.2bn syndicated loan default which is now a liability that must be factored in any acquisition bid.

In their views, aside the liabilities, it would have been easier for an existing player in the industry wishing to raise its bar of market share to buy up the company and sharply rise to become a strong competitor.

However, some followers of the matter say the seemingly protracted way and not very clear manner the debt restructuring is being managed by both the Central Bank of Nigeria and the telecoms regulator, NCC are becoming too cumbersome for potential investors to decode the happenstances.

There are some levels of industry agreement that leading national carrier, Globacom would have been a better match if it has a clear interest.

In their submission, it is believed that if Glo muster the courage to take the bull by the horn and acquire Etisalat, the table of narrative in the industry lead will change with immediate effect.

This is so because when Glo adds up its 25.77% to Etisalat’s 12.76%, it will rise to 38.58% to tactically dethrone leading telecoms, MTN, which is currently at 37.89% and still battling to pay the NCC fine for SIM deactivation surcharge.

Knowing full well that it will take a while for the fine to be completed, Glo may pump more funding to network infrastructure to deepen mileage of market leadership gap for a long time.

Apart from the fine ‘Wahala’, why MTN may not go for Etisalat now may include the impacts of Visafone it bought and its ongoing plan to pick up Multichoice. Industry analysts say it may be too hard for it to secure approval to buy Etisalat because of fear of monopoly by the regulator.

On the third leading telecoms, Airtel, the coast may not be very clear for the company as it is not yet very clear if the plans of the parent body to reduce stake in Africa is now offline.

Looking at the international market and possibles, Orange currently has no telecoms expansion plans because it recently announced the launch of an Africa-focused arm of its early-stage investment programme tagged; Orange Digital Ventures, with a EUR50 million (US$56 million) to the new initiative.

Business Hilights recalls that earlier this year, Orange MEA invested in three new subsidiaries including Cellcom in Liberia and Airtel in both Burkina Faso and Sierra Leone.

On the other hand, Vodacom/Vodafone is always known to be category-king like what it is doing in Ghana. It is not good in fighting for market share as any international investor coming must be ready to fight for market share in a market it has no prior details and during recession period.

Before the pullout of the parent body, Etisalat had been in talks with Nigerians banks to restructure a $1.2billion trade facility after missing repayments, but the talks failed to produce tangible result.

Another strange plan would be if the consortium of banks including Zenith Bank, Guaranty Trust Bank, First Bank, United Bank for African, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank can decide to jointly float a special purpose vehicle (SPV) and rely on the loan default to enter telecoms industry. It was not very clear if the banks have such in mind and if NCC regulation may allow that. Besides, the banks have earlier said that their concern is to get their money and not to own the embattled firm.

Only yesterday, Tuesday, the NCC during the telecoms Consumers Parliament held in Abuja said it will continue to work with CBN to protect the subscribers and employees as the crisis lasts.

 

*LATEST NCC DATA ON TELECOMS SUBSCRIBER BASE AS AT MAY 2017.

 

  Airtel EMTS Globacom MTN
No. of Subscribers 34,156,434 18,500,772 37,365,755 54,921,331
Percentage(%) 23.56% 12.76% 25.77% 37.89%

*Source: NCC Website

About Business Hilights

Business Hilights is an online news channel conceptualized and structured to report and track on a daily basis; latest developments in critical business sectors to serve as a one stop news gateway for governments, foreign and indigenous investors.

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