In less than 16 days, Barclays Africa will announce the preferred bidder for the sale 9mobile, Nigeria’s fourth largest mobile company with 17million subscribers.
It is pertinent to raise certain industry concerns before this development, because the announcement could make or mar the industry if critical factors are not considered beyond payment of debt incurred by 9mobile and consideration of certain interest groups among the stakeholders.
This January 2018 marks the 17th year when MTN Nigeria’s largest telecommunication company made payment of $285million as license fee to operate telecommunication services in Nigeria.
The bid was historic, transparent and seamless giving credit to Nigeria in all ramifications under the watch of the Nigeria Communications Commission(NCC).
The success of this bid led to the rapid growth seen in the industry today, which stands as one of the only viable sectors in Nigeria and a major reference point of assessing government/ democratic dividends.
In this period of 17 years, the industry has attracted about $40 billion in foreign direct investment and has moved from a mere figure of 400,000 lines to 150million lines in the year 2016. This is a massive leap and remains the pride of Nigeria especially from marketing and economic perspectives.
This is not to say the industry did not have a share of her own challenges, there were a lot and a lot still exits.
The coming of etisalat (Now 9mobile)
The manageable success giving the late entry into the market of the then etisalat, now 9mobile, was largely seen by industry watchers as an uphill task and a mission impossible. But today, the company boasts 17 million subscribers despite all the challenges.
Considering other factors, 9mobile has by all calculations, added value to the industry and changed the face of competition.
The same success story cannot, however be said about their financials.
For me, It is a scam with the active connivance of banks involved in its packaging, to aid capital flight in the guise of eventually returning to claim that the dollar exchange rate moved against the company.
This ‘red flag of a trajectory’ no doubt, is a story soon to be told. The good news is, we have assets that can be sold.
The need for caution…
9mobile with 17 million active subscribers and a robust network, which pride to be the best in Nigeria, can develop a cancerous effect if sold to the wrong bidder.
Therefore, there is a need to consider the following factors:
- 9mobile should not be sold to a Greenfield company that does not have close to equivalent infrastructure existing in Nigeria. The reason is because the Nigerian terrain is tough and unique and continue to change dramatically.
- The reason for purchase should not be to claim the chart as number one largest network but to consolidate on building a robust network that guarantee seamless call transition and increase competition to the overall benefits of the subscribers.
- Verified financial muscle adequate for the emergence of the biggest network in Africa must be unambiguous. A mistake in this area will spell doom for the industry. The power sector is suffering from this as at present.
- The right price. With the sentiments being thrown around, there is fear that offer for sale may be unrealistic and further complications may come up in the future. Bidders should resist unrealistic offers and define the breakeven point under a very conservative cash flow. This is important and lessons abound in Nigeria.
- Keep the banks away: The banks should be made to understand that the only role they have to play in this transaction, is to get back their loans. Any further roles will be counterproductive but knowing Nigerian banks for what they are, they will engage in further roles in a bid to continue to be part of the company. We must avoid a situation whereby fresh money is not injected into the company but a kind of financial cowboy structure where the same debt is converted into fresh loan on an “in and out” basis. This will be very sad and painful
Finally, the extension of deadline of two weeks for its sale by Barclays Bank is not seen by many in good light. We are however watching and waiting with bated breath.
Lai Omotola is GMD, CFL Group and Publisher of Entrepreneurtv.ng