ETISALAT: Is name change possible in three weeks?

•We’ve subsisting right to use the name, says EMTS

By Prince Osuagwu (Hi-Tech Editor)

JUST when the heat was beginning to die down on Emerging Markets Telecommunications Service, EMTS, (known as Etisalat Nigeria) over the lingering $1.2bn loan repayment saga, a fresh chapter which may add to the headache the telecom company has had to live with in the last four months, has just opened. Etisalat International wants the Nigerian arm to discontinue the use of Etisalat as the brand name.

The group has given just three weeks for Etisalat Nigeria to get a new identity. Following the divestments of parent body, Etisalat of UAE and Mubadala, chairman of the board of the company, Hakeem Bello-Osagie and top executives of the company, penultimate week, resigned, paving the way for a new management team which came into place just last week.

After the new board was put in place, it appeared normalcy had returned to the embattled company, Monday, when chief executive of United Arab Emirates based Etisalat International, Hatem Dowidar, announced a complete withdrawal of Etisalat in the Nigerian telecoms sector. This followed the termination of a management agreement with Etisalat Nigeria and subsequent withdrawal of all UAE shareholders.

In an interview with Reuters, Dowidar confirmed that, “all UAE shareholders of Etisalat Nigeria have exited the company and have left the board and management.” He also disclosed that discussions were ongoing with Etisalat Nigeria to provide technical support, however, the Nigerian company can only use the brand for another three weeks before phasing it out completely.

EMTS reacts: However, the Nigerian company seems to be calling the bluff of its UAE estranged partner. Vice President, Regulatory and Corporate Affairs, Etisalat Nigeria, Ibrahim Dikko, said, “EMTS has a valid and subsisting agreement with the Etisalat Group, which entitles EMTS to use the Etisalat brand, notwithstanding the recent changes within the Company.

Nigerian spirit of excellence

Indeed, discussions are ongoing between EMTS and Etisalat Group pertaining to the continued use of the brand, and EMTS will issue a formal statement once discussions are concluded. The final outcome on the use of the brand in no way affects the operations of the business as our full range of services remain available to our customers.

“EMTS launched in Nigeria in 2008 with “0809ja” to affirm the Nigerianness of our origin and sphere of influence. In our nine years of operation, we have remained a prime driver and avid supporter of the Nigerian spirit of excellence, and we will continue to stay true to our Naijacentric identity. Nigeria remains the soul of EMTS’ business and we have made the brand alluring to our teeming subscribers who see a piece of the spirit and character of Nigeria in everything we do. EMTS is here to stay and we wish to assure our esteemed customers that our core values of youthfulness, customer-centricity and innovation will remain the pillars on which we operate.”

Complications in new brand name: Although Etisalat Nigeria has said the development is not in any way capable of shifting its focus from providing quality telecoms services to its over 21 million subscribers in Nigeria, the reality of getting a new brand name in just three weeks is what stakeholders in the telecoms industry, feel is impossible. Besides, when the creditors attempted a takeover late last month, the telecom regulator, Nigerian Communications Commission, NCC, sounded a clear note of warning that a takeover or change of brand name may have complications due to the provisions of the Nigerian Communications Act.

Director Public Affairs, NCC, Mr Tony Ojobo, in a statement, said: “The commission has drawn the attention of the banks to provisions of the Nigerian Communications Act (NCA) 2003 Section 38: Sub section 1 which says: ‘The grant of a licence shall be personal to the licencee and the licence shall not be operated by, assigned, sub licensed or transferred to another party unless the prior written approval of the commission has been granted. “Sub section 2: A licencee shall at all times comply by the terms and conditions of the licence and the provision of this act and its subsidiary legislation.”

Even on the new development, though Ojobo could not be reached for comments, an NCC source said the commission still stands firmly by the provisions of the Nigerian Communications Act, adding that the law must be applied where necessary without prejudice to whatever arrangements are on ground. In the light of these difficulties, stakeholders expressed disappointment that Etisalat international gave the Nigerian company a mere three weeks to complete a task as complicated as taking on a new brand name.

A telecom sector analyst Dr. Thompson Ona stated that non-friends of the Nigerian economy must not be allowed to win. His words, “when this issue started, I warned the sector of the impending doom that could befall the company if Etisalat Nigeria is allowed to be messed up by interests that cannot be considered friends of the Nigerian economy. This is the way it begins. I said it that Nigeria should challenge the withdrawal of these investors, knowing that they have a huge debt incurred together with the Nigerian arm of the business. Now, they are rubbing the insult in, with a three-week ultimatum for Etisalat Nigeria to create a new brand name; where has it happened before?

“I strongly suggest that the NCC, CBN and all telecom operators, tell Etisalat International that its ultimatum is wicked; its idea of creating a new brand name in three weeks, preposterous.”

He added that the operators should jettison anti competitive tendencies in this matter and support Etisalat Nigeria fully, considering that if allowed to stand, the decision of the UAE based telecom operator may have a domino effect on all their operations.

Also, a Lagos based telecom lawyer, Chukwu Nwachukwu said that the thought of getting a new brand name in three weeks with all the processes involved is almost laughable. “I do not know if Etisalat Nigeria had started the processes before this ultimatum, but what I know is that the company cannot do a better job and may not get a better brand image with a brand name put in place in just three weeks. It should negotiate with its former partners for an extension of time. That is the only way to get a real deal.”

Telecom brand change template: The brand name change, when it happens, will not be the first on the nation’s telecommunications landscape.  Following completion of the first round of GSM licensing, Econet Wireless Nigeria (EWN) started business with the 0802 number plan on August 5, 2001. All seemed well, until 2004, when after a shareholder dispute, the company was purchased by Vodacom of South Africa. Suddenly Vodacom pulled out of the country in one of the shortest-lived corporate deals. The company quickly pulled itself together, and resumed trading as VMobile Nigeria, owned by Vee Networks Limited.

As the year 2006 dawned, subscribers who were just getting used to the Vmobile brand name could not know that soon another brand name change was imminent. In May of that year, Celtel International, owned and promoted by a Sudanese electronics engineer, Dr. Mohammed Ibrahim, acquired majority equity in Vee Networks. Again, a little over two years after the Celtel brand had become entrenched, Mo Ibrahim’s Celtel International fell prey to another corporate investor, MTC Group of Kuwait, which later transformed into the Zain Group. Zain effected another re-branding.

Finally in March 2010, Bharti Airtel of India bought over Zain’s operations in sub-Saharan Africa, which included Nigeria and the company was renamed Airtel Nigeria, which it has been to date. So in effecting a brand name, there is already a template to copy. However, the case with Etisalat Nigeria’s is that the parent body wants the Nigerian arm to do away with the name in three weeks.

Genesis of Etislat Nigeria

EMTS, trading as Etisalat Nigeria, is a Nigerian company duly incorporated under the laws of Nigeria in partnership with Mubadala Development Company and Etisalat of the United Arab Emirates. It acquired the Unified Access Licence from the Federal Government in January 2007. The licence includes a mobile licence and spectrum in the GSM 1800 and 900 MHz bands. Etisalat acquired a 40 per cent stake in EMTS and became the operator of the Unified Access Licence.

The telecom company made the first official call on its network on March 13, 2008 in the presence of officials from the Nigerian Communications Commission, NCC, and the Senate of the Federal Republic of Nigeria. In September of same year, it kicked off commercial operations with the 0809uchoose campaign which enabled Nigerians choose numbers special to them as their mobile numbers.

The company since then has grown geometrically, accumulating over 21 million subscribers on its network, employing over 5000 workers and controlling well over 13 percent market share. It has also made investments in network infrastructure, roll out expansion, mobile broadband and other corporate social responsibility and development initiatives, including the Etisalat prizes for innovation and Literature.

Its former partner, the Etisalat of UAE has been the telecommunications service provider in the United Arab Emirates since 1976 and has footprints in 18 countries traversing the Middle East, Asia and Africa. In its many years of operations, it has built up state-of-the-art telecom infrastructure and taken a leadership position of innovation, and quality service delivery among regional and international operators.

International operators

This gave Nigerians hope that despite being about the last entrant in the Nigerian telecom sector, it has all it takes to help EMTS weather the storm. To actually prove this, the three investors making up Etisalat Nigeria unfolded their investment plans to make the brand a strong competition to already existing operators.

Network rehabilitation:  In April 2013, the company announced it would invest over $500 million to expand its network, enabling further potential market growth of 17 per cent and went ahead to obtain a medium term loan of $1.2bn from a consortium of 13 banks, which it used to refinance an existing $650 million loan and fund a modernisation of its network.

The loan, which involved a foreign-backed guaranty bond, was for it to finance a major network rehabilitation and expansion of its operational base in Nigeria. However since 2016, the consortium of banks has been having a running battle with the mobile telephone operator over repayment of the loan facility.

Meanwhile, Etisalat said that it had consistently serviced the debt until when it began to experience cash flow problems following the steep depreciation of the naira and the impact on its foreign currency denominated exposure. It, however, revealed that the outstanding loan sum to the consortium stands at $227m and N113bn, a total of about $574m if the naira portion is converted to US dollars. This in essence means almost half of the original loan of $1.2bn has been repaid.

Following breakdown in negotiations, the company’s two foreign investors, Emirates Telecommunications Service and Mubadala withdrew their interest in the concern, compounding the problems of EMTS.  Now, it appears a takeover is most likely. However, there are indications that UK based Orange Telecom and Vodafone are in pole frame to fill the void left by Emirates telecom and Mubadala.

Although many other companies are reported to be in the battle to cut the Etisalat pie, inside sources at Etisalat hinted that Orange and Vodafone Group are in strong positions to buy 65 per cent of Etisalat Nigeria following the exit of Mubadala and ETS. However, whether these companies would be able to complete acquisition of the company and effect a name change all in three weeks is left to be seen.

 

The post ETISALAT: Is name change possible in three weeks? appeared first on Vanguard News.

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