Banks say NCC hurting 9mobile with delayed sale
Nigerian banks owed by the telecommunications firm 9Mobile say they feel let down and confounded by the undue delay in completing the sale of the firm to the successful bidder Teleology which is being promoted by well-respected pioneer CEO of MTN Nigeria, Adrian Wood.
The deal is being held back by the failure of the regulator, Nigerian communications commission (NCC) to issue a certificate of no objection for the operating license of 9Mobile to be passed on to Teleology which came tops in a bid process that was championed by the Central Bank and NCC to revive the firm while keeping the creditor banks away from taking control.
Teleology holdings limited, the preferred bidder and new investor of 9mobile had before now, successfully raised and made ready its balance of $251 million which was paid into an escrow account about two weeks before the July 25, 2018 deadline date.
This is in addition to the initial $50 million paid as a non-refundable deposit on March 21 2018, to show commitment on the sale in fulfillment of its buyer obligation but it is still unable to gain control as a result of what the banks call the “intrigues and unseen hands” bent on wrecking the ship.
At separate interviews yesterday, several senior bankers from the consortium of banks blamed the NCC for its “inconsistency, a lack of commercial mindset and its failure to make good its commitment to join to protect jobs and subscribers at 9Mobile.”
According to the CEO of one of the banks, “we are now not talking of a mere ordinary disappointment. The banks have been locked in a no man’s land and what is happening today is shameful for Nigeria, worse still to whom do you now complain.”
The total size of 9Mobile loans outstanding to Banks of $1.2 billion has negotiated down to $800 million, of which $301 million was due to be paid by the new investor, Teleology.
The $500 million balance of the outstanding debt is set to be restructured over an eight-year period, with a two-year moratorium.
The firm 9Mobile generates revenues of N200 billion per annum, with an EBITDA margin of 10 percent, according to data from investment Bank Renaissance Capital.
“There has been no capex spend since 2014. 9Mobile needs to invest between $300mn- $450mn a year to remain competitive,” Renaissance Capital analysts led by Olamipo Ogunsanya, said in a recent note.
“9Mobile has lost subscribers, its margins are under pressure, and lack of capital investment has made it less competitive than peers.”
Teleology deposited the payment (part of which came by way of a funding support from AFREXIM Bank) into the escrow account after it successfully signed a share purchase agreement with the consortium of banks which in return committed to obtaining a certificate of no objection for deal from the NCC.
The bank CEO who spoke to BusinessDay yesterday explained that at the much-publicized meeting of all concerned parties in Abuja at which the executive vice chairman, EVC of the NCC Umar Danbatta was present, the EVC agreed that he will issue the certificate of no objection the day the parties met the requirements.
According to the CEO, “first the NCC said 9Mobile was owing it about N9bn in AOL charges, spectrum fees, etc, and that this debt must be settled. We said but that will be heavy handed given that other telecoms firms owe the NCC and it has not restrained them from carrying out their legitimate business. But so as not to present the regulator with a good excuse, the banks rallied, round working with 9Mobile and paid N6bn of that amount to NCC. The banks and 9Mobile also agreed with NCC on a credible plan for the balance.
“When this was no longer the issue, the NCC suddenly came up with a demand to conduct due diligence on the buyers. But where was the NCC (which has a representative on the board of 9Mobile) when Teleology was shortlisted? Where was NCC when the share purchase agreement was signed? The CVs of the key officers of Teleology have been sent to NCC.
“When this seem no longer to be the problem, NCC has now turned around to say, wait, 9Mobile you took us to court over the sale of Visafone spectrum to MTN, you must discontinue that case. The lawyers of 9Mobile have now presented to NCC a 9Mobile board resolution to this effect and filed a notice for the discontinuation of the case given that the courts are still on recess.
According to the bank CEO, “when this ceased to be the issue, NCC has now come up with another excuse, and that is that 9Mobile has to pay its trade creditors like IHS, Huawei and Nokia. And we say yes 9Mobile is owing but it is a going concern and there is no company anywhere that does not owe. Even the NCC cannot say it is not owing anybody today.”
The banks also agreed to share some of the funds they are expecting from Teleology with the trade creditors, once the 9mobile sale is concluded, however that has again failed to move the needle on the transaction.
““The longer this transaction takes to mature, the lower the value of what they are acquiring,” said Bismarck Rewane, CEO of economics consulting firm Financial Derivatives.
“We need 9 mobile to survive and we need it to be competitive, what we do not want is for the business to become the nearest thing to a duopoly. That is not good for the consumers and the economy,” Rewane said.
BusinessDay learnt that the central bank which restrained the banks at the beginning, now feels thoroughly embarrassed by the ugly turn of events.
At Mobile, the usually calm and quiet CEO Boye Olusanya told BusinessDay he does not know why the transaction is being delayed.
He said, “I have no explanation for why the sale is delayed. As you know this matter is in the hand of the regulator and you can go to them at NCC to get an explanation. What is clear to us at 9Mobile is that this business, this company 9Mobile needs a resolution of this matter as we cannot be put in a limbo without end.”
Industry analysts and telecoms market officials say that while the crisis at 9Mobile has lasted the biggest beneficiary has been the competitor AIRTEL.
According to one industry player, “those who point to MTN as the biggest single beneficiary miss the point. MTN will benefit on account of its size, but the largest single beneficiary in the last one and half years is AIRTEL. Its EBIDTA are up, AIRTEL revenues are also up, helping it to take out some cash. We reckon that two years ago, annual revenues for AIRTEL stood at around N250bn while that of 9Mobile was N220bn, about 80%. However, by year end July 2018, we believe AIRTEL revenues jumped astronomically to around N350bn and the revenue of 9Mobile has dropped to far less than 80% of Airtel’s.”
BusinessDay tried to get an official statement from the Central Bank of Nigeria (CBN), but Isaac Okorafor, acting director, corporate communication, directed all enquiries to NCC, saying “we don’t regulate 9Mobile”.