Barclays pulls out as Financial Adviser for 9mobile as CBN, NCC queries!

In a letter dated the 4th November, 2017 written jointly by Umar Danbatta (Vice Chairman of the Nigeria Telecommunications Commission) and Godwin Emefiele (Governor of the Central Bank of Nigeria) to GTBank (The facility agent in the acquisition & sale of Etisalat & 9mobile), they said “There are serious concerns with the unwillingness of Barclays Africa to follow a transparent & fair, with the financial and technical capabilities of the final bidders without question”

In July 2017 Mubadala, the UAE shareholders in Etisalat Nigeria announced that due to a collapse in loan syndication and restructuring of 541.8bn owed to Guaranty Trust, Access & Bank, and 7 other banks, they would have to pull out of Nigeria giving up their ownership equity in the company and requiring the banks to take up administration, while also having 1month to rebrand the company or face penalty. Since March, the Banks have rebranded to 9mobile and have being in a constant battle to transition its existing 24m customers to its new brand while also meeting up with the 6months target given by the NCC & CBN to sell the company to reliable telecom investors.

The letter says “They have repeatedly exhibited signs of opacity in the sales process of 9mobile. Given the overriding public interest in the company and the need for transparency, we advised that Barclays advertised the call for ‘expression of interest’. Barclays declined, insisting that the company being a private one should not be taken through a public sale”

The regulators said they have received reports from concerned stakeholders and investors including bidders, who are being shut out from the process of sale, and the concern of regulators is to restore the credibility of the process to ensure equity and fairness to all. They insist that the process must be ‘open and transparent’ and the December 31 2017 deadline for the handover of 9mobile to the preferred bidders ‘remains sacrosanct’

So far they are 11 companies that has submitted expression of interest for the acquisition of 9mobile:

  1. Globacom Nigeria Limited (Anti thrust issues)
  2. Bharti Airtel (Anti thrust issues)
  3. Smiles Telecoms Holdings
  4. Helios Towers
  5. Centricus Capital
  6. Africell
  7. Abraaj Capital
  8. Teleology Holdings Limited
  9. Ericsson
  10. Africa Capital Alliance (ACA)
  11. Carlyle Group

What the Regulators will consider in the final application for approval of this acquisition will be:

  • Capital base
  • Telecom experience
  • Lack of anti thrust to avoid conflict of interest and undue monopoly
  • Credible Board & Shareholders
  • Ability to build and sustain strong competition with the company in the industry

 

Kelvin Emmanuel

About Kelvin Emmanuel

The Oil producing Angola in the Southern part of Africa faces what Nigeria faced 12months ago; a distortion in its exchange rate with a difference between the official markets and the parallel black markets. One dollar through the official window buys you 166 kwanza, while one dollar through the black market buys you 400 kwanza. Nigeria faced the same challenge 12months ago, when the distortion between the official and black markets was as much as the official markets trading at 306 with the parallel market ranging from 450 through to 510. The Central Bank Governor of Angola, Jose de Massano Junior announced in Luanda “We will stop having a fixed foreign exchange, we will adopt a floating regime of foreign exchange”. Angola faces exactly the same challenges and has been applying the exact same responses to an exchange rate crisis like using its foreign reserves that was sitting at $26bn to defend the currency kwanza, with no success so far, even though the external reserves has dropped to $14bn. Angola relies on Oil receipts for 80% of its government revenue, 90% of its inflow and 50% of its GDP. Angola is a $194bn economy that has been growing at an average of 10% on the back of rising oil prices since 2002 when its 27 year old civil war that started in 1975 ended. The state national oil company Sonangol reports that it produces up to 1.8m barrels of crude oil daily, however the government that until now has being led by the family dynasty Jose Eduardo dos Santos until recently when succession saw power transferred to Joao Lourenco, reports that the oil price rout in 2015/2016 that saw prices drop to as low as $28 per barrel caused ripples across the economic structures of the government, upsetting government revenues, its ability to fund its budget, capital project funding, foreign direct investments into the economy as a result of a currency crisis that was driven by the widening of gap between the official and street window of the kwanza, that until now has been pegged in a fixed exchange rate regime to the US Dollar.