All Eyes on Teleology
Having gained the full ownership of 9mobile, stakeholders are eagerly watching to see how Teleology will turn around 9mobile, writes Emma Okonji
Teleology Holdings, on Monday this week, received the nod of the Nigerian Communications Commission (NCC), the telecoms regulator, to take full ownership of 9mobile. NCC transmitted a letter of ‘No Objection’ to Teleology Holdings, which is an express approval for the company to take full ownership of 9mobile. The approval, however, came after a long wait of 10 months for Teleology to take full control.
Barclays Africa, the financial adviser handling the sale of 9mobile, had announced Teleology Holdings as the preferred bidder and Smile Telecoms Holdings as the reserve bidder. Despite the announcement by Barclays Africa and the subsequent transmission of letters of notification to both the preferred bidder and the reserve bidder since February 21, 2018, Teleology could not take over 9mobile because it was yet to get the letter of ‘No Objection’ from the NCC.
The Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta had said NCC needed to conduct due diligence on Teleology Holdings to ascertain its technical competence in managing 9mobile. He, however, said the due diligence has been conducted and the report submitted to the NCC board, and that the board would come up with a position statement, based on the findings of the report.
Having received the approval, Teleology quickly appointed its new Board of Directors, who had earlier been chosen, but could not be announced, because the approval was yet to be given at that time. The new Board is expected to swing into action and resuscitate the telecoms company from its years of financial crisis.
9mobile was plunged into deep financial crisis five years ago, precisely 2013, when the former Etisalat Nigeria, which later rebranded and changed its nomenclature to 9mobile, had need to expand its telecoms business, but did not have the financial muscle to do so. The zeal to expand its operations and become more competitive, drove it into approaching a consortium of 13 local banks for a loan of $1.2 billion, which it eventually got, but could not complete the loan repayment plans, a situation that plunged the telecoms company into deep financial crisis, which led the sale of 9mobile to Teleology in February 2018.
Although Teleology is excited that it has finally taken control and ownership of 9mobile, but industry stakeholders are watching to see how it will revive 9mobile amidst market competition.
Newly appointed board members Teleology said the new Board of Directors for 9mobile was appointed following the successful completion of the tenure of the former Board appointed by the Central Bank of Nigeria (CBN) and in fulfillment of the consequential transfer of final ownership to the new investors.
The seven-man board include Nasiru Ado Bayero as Chairman; Asega Aliga as non-executive director; Adrian Wood as nonexecutive director; Mohammed Edewor as non-executive director; Winston Ndubueze Udeh as non-executive director; Abdulrahman Ado as executive director and Stephane Beuvelet, as Acting managing director.
“We thank all out-going members of the board for helping to shepherd 9mobile through the critical transition phase it has passed through since July 2017 and wish them the very best in their future assignments.
“For us, the composition of the new Board of Directors is another significant milestone, and this follows the issuance of final approval of ‘no objection’ by the board of the NCC to the effect that the technical and financial bids Teleology submitted for 9mobile met and satisfied all the regulatory requirements. This is indeed the dawn of a new era in the evolution of the 9mobile brand in the Nigerian market,” the company said in a statement.
The new Chairman of the board Ado Bayero welcomed the appointment stating, “As we begin this new epochal phase, we wish to thank all the employees who built this viable business. Our debt of gratitude also goes to our subscribers even as we assure them to get ready for real best-in-class additional value for their relationship with the 9mobile brand. Without you, there could not have been a 9mobile business for us to invest in today. We will justify your confidence in our brand by making significant investments that will improve the value you get for using 9mobile.”
The emergence of Teleology When the opportunity to invest in 9mobile came in 2017, following the financial crisis that rocked the telecoms company and the eventual decision to sell 9mobile to core investor who will be willing to release funds to settle the financial indebtedness of 9mobile and still invest fresh funds to drive the telecoms business, Barclays Africa was appointed to handle the sale through a transparent auction process.
At that time the former CEO of MTN Nigeria, Adrian Wood an Australian born technocrat, who became the face of Teleology Holdings in Nigeria led Teleology Holdings to bid for 9mobile.
After due considerations, based on the technical competences and financial capabilities to manage 9mobile, Barclays Africa announced Teleology Holdings as the preferred bidder and Smile Telecoms Holdings as the reserve bidder, among 16 contenders who initially submitted bid for 9mobile.
Letters were transmitted to both final contenders on February 21, 2018, informing them of their positions in the sale of 9mobile.
The letter also directed Teleology Holdings to make a non-refundable cash deposit of $50 million within 21 days of from the date of the letter, dated February 21, 2018, or stand the chance of losing the bid to the reserve bidder, which is Smile Telecoms Holdings.
After the payment of the initial $50 million deposit, Teleology was expected to pay the remaining balance of $251 million, to complete the $301 million it proposed during the bid process to acquire 9mobile.
Teleology was mandated to pay the balance of $251 million within 90 days, beginning from March 21, 2018, which was the deadline given it to pay the $50 million non-refundable cash deposit. Determined to take over 9mobile, Teleology Holdings met both payment deadlines, but had to patiently wait for months before approval was eventually given for the total ownership of 9mobile.
Teleology’s strategic plans In less than 24 hours after meeting the March 22 deadline for the payment of the $50 million non-refundable cash deposit for 9mobile, Wood announced his 10-point agenda on which the telecoms company would be managed.
Teleology, in a statement detailed an ambitious plan of action that would guide its rapid overhaul not only of the network but all aspects of the operations.
According to Wood, “9mobile is transiting into a new phase that will be defined by optimal value delivery: value to our employees, value to our customers, value to local communities and indeed to all stakeholders.”
He added that Teleology would be “engineering led and brand driven.”
“In delivering service, “we will strive to ensure that 9mobile operations deliver fulfillment to our customers, empowerment to local communities, protection to the vulnerable, and excellent rewards not only to our shareholders but to all stakeholders,” Wood said.
Part of the plan is to double the 9mobile network with new 3G/4G specific cell sites as well as a several thousands of kilometers of fiber optic cable across the country. It will drive a special program of rural internet coverage, focusing on 4G with broadband access planned for all of Nigeria’s 774 Local government areas, Wood said in the statement.
Stakeholders’ Position Industry stakeholders have commended the recent development that led the transmission of letter of ‘No Objection’ by NCC to Teleology, which they said, would enable Teleology move in to resuscitate 9mobile and reposition it on the part of growth and competition.
The Chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, said it would have been a big setback not only to 9mobile, but also to the entire telecoms industry, if Teleology was denied the full ownership of 9mobile, after he was declared the winner of the keenly contested bid process.
“We were all expecting Teleology to take ownership of 9mobile, having been announced as the preferred bidder, but now that it has received the nod to take full ownership control, I urge Teleology to do its best in turning around the telecoms company into profitability,” Adebayo said.
President, National Association of Telecoms Subscribers (NATCOMS), Chief Deolu Ogunbanjo said: “I am happy and the entire telecoms industry is happy that Teleology has been given the right to take over 9mobile. This is what we have been expecting, and we believe that the approval would put an end to possible job loss, drop in telecommunications contribution to GDP, and setback on the telecoms sector, which the delay would have created.”
Genesis of 9mobile Crisis 9mobile, formerly known as Etisalat Nigeria, became the fourth entrant into the GSM space in Nigeria, when it rolled out its commercial services on October 23, 2008.
But for want of network expansion, the telecoms company in 2013, approached a consortium of 13 local banks for a loan of $1.2 billion for network upgrade and expansion.
However, citing economic downturn of 2015-2016 and naira devaluation, which negatively impacted on the dollar-denominated component of the loan, the former Etisalat Nigeria, fell short of repaying the loan, a situation that compelled the banks to plan possible takeover of the telecoms company.
After all negotiations between the telecoms company and its lending banks failed, Emirates Telecoms Group Company (Etisalat Group), pulled out of the shareholding structure and announced on the Abu Dhabi Stock Exchange in the United Arab Emirates (UAE), the transfer of 45 per cent of its stake and 25 per cent of its preference shares in Etisalat Nigeria, to United Capital Trustees Limited, the legal representative of the lending banks.
The other two core investors, Mubadala Development Company which has 40 per cent stake and Emerging Markets Telecommunications Services (EMTS), representing the Nigerian shareholders, which has 15 per cent stake, remained committed to Etisalat Nigeria, despite its debt crisis.
Few days after it pulled out of the shareholding structure, six Mubadala and Etisalat Group-appointed non-executive directors, all nationals of the UAE resigned their appointments, an action that was shortly followed by the resignation of the former board chairman, Mr. Hakeem Bello-Osagie, who is a Nigerian. This was again followed by the resignation of the then CEO, Mr. Mathew Willsher and several management staff of the telecoms company.
The Interventions The intervention of NCC and the CBN, eventually led to the planned sale of 9mobile in order to recover enough money to pay its debt.
In order to save the situation, several meetings were called at the instance of NCC, and the meetings were held between NCC, CBN, 9mobile and the management of the 13 banks, and it was agreed that 9mobile be sold to interested investor that is financially capable and willing to invest in the telecoms company and to release the much needed funds to settle its loan debt.
It was based on the intervention that Barclays Africa was appointed to handle the sale of 9mobile.
Now that Teleology has received NCC’s approval to take full ownership of 9mobile, industry stakeholders are interested in seeing how Teleology will bring 9mobile to limelight, after five years of financial crisis.