Danbatta: $100m Debts Delay Takeover Of 9mobile
Fresh facts have emerged on why the sale of 9mobile still lingers despite the declaration of Teleology Holdings Limited as the preferred bidder by Barclays Africa, the financial adviser handling the sale.
The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, who disclosed this in an interview with THISDAY in Durban, South Africa, revealed that the delay in handing over 9mobile to Teleology was as a result of the unpaid $100 million outstanding debts, which 9mobile was supposed to pay to equipment suppliers and contractors like Huawei, IHS and Nokia, among others.
Although he said the $100 million as well as others were classified outside the $1.2 billion loan that the telecoms company owed the 13 local banks.
He, however, explained that the payment of the outstanding sum was part of the agreement reached by the parties involved in the sale of 9mobile, before handing over 9mobile to Teleology.
He equally said the due diligent report conducted by NCC on Teleology to ascertain its technical competence in managing 9mobile, had been submitted to the NCC board, but that the board was yet to come out with a position statement, based on the findings of the report, as a result of the delayed payments by 9mobile.
Danbatta reiterated that Teleology had deposited the balance payment of $251 million in an escrow account of the Central Bank of Nigeria (CBN).
According to him, NCC’s due diligence report on Teleology would be released after all debts owed by the telecom company have been paid.
According to Danbatta, “Barclays Africa, the financial adviser handling the sale of 9mobile announced Teleology Holdings Limited as the preferred bidder of 9mobile and Smile Telecoms Holding as the reserve bidder in the ongoing sale of 9mobile.
“Now the spectrum licence of 9mobile belongs to Emerging Markets Telecommunication Services (EMTS), but trading as 9mobile. Teleology had since paid a non-refundable deposit of $50 million and the record is there to show for it and we have verified the payment. Teleology also paid $251 million into an escrow account of the Central Bank of Nigeria.”
While Smile Telecoms Holding offered a bid price of $300 million, Teleology offered a bid price of $301 million to emerge the preferred bidder for the 9mobile sale. After announcing Teleology as the preferred bidder, Barclays Africa directed Teleology to make an initial non-refundable cash deposit of $50 million within 21 days, which expired on March 21, 2018, and then pay the balance of $251 million within 90 working days from March 21, which expired July 25, 2018, and Teleology had since made these payments.
Danbatta further said, “Based on these payments, the NCC needed to transmit a letter of no objection to Teleology for the transfer of the shares of Etisalat from EMTS to United Capital Trustees, which is the receiver manager for the 13 local banks that gave Etisalat, now 9mobile, the loan of $1.2 billion. The shares will then be transferred from United Capital Trustees to Teleology.
It is a two phase transfer of shares and NCC has transmitted the letters of no objection for the two phase transfer of shares from EMTS to United State Capital Trustees, and then from United Capital Trustees to Teleology. But what has not been transferred is the spectrum licence to Teleology because there is a caveat around it. So the operational and spectrum licences of 9mobile are still with EMTS. Again Teleology is expected to make another tranche of payment of $100 million to service the debts of equipment suppliers and vendors like Huawei, IHS and Nokia, which 9mobile is owing.”
He explained that there was another amount that is consistent with the recapitalisation of 9mobile that Teleology needed to pay. All these remaining payments, he said, have to be concluded before the NCC will release its report on Teleology’s capability in handling 9mobile, to conclude the sale of 9mobile.