9mobile opening UK investment window
9mobile, Nigeria’s fourth largest telecommunications service provider, is gearing towards sealing a deal with investors from the United Kingdom, who may be willing to offset its $1.2 billion loan debt, especially as there hasn’t been any public show of interest from local investors since its formal announcement a few months ago, BusinessDay gathered.
Sources close to 9mobile, which formerly operated under the name Etisalat Nigeria, told our reporter that Boye Olusanya, Chief Executive Officer, 9mobile, has just returned from the United Kingdom, where he went to make final agreements with investors.
“The CEO went to the UK to discuss issues with new investors who have shown interest in the newly branded 9mobile. In the next few weeks, I’m sure an announcement would be made about the outcome of the meeting. Apart from that, management and operations have been running smoothly and the issues they had with quality of service, due to disruptions in one of the data centers have long been resolved,” Our source said.
This development tends to contradict the books, as no British player has been involved in Nigeria’s telecoms industry since 2001 when they missed out in the bids to invest in telecommunications in Nigeria, following advice from consultants who had said that income per capita was too low to sustain telecoms business in Nigeria. The consultants had further said that corruption levels were at the time, high and hazardous to business and that infrastructure shortages would raise costs and thin out margins.
They listed other perceived pitfalls as including that crime rate was too high, that the Nigerian judicial system was too slow and winding to grant redress to aggrieved parties and that the government tends not to honour legally binding agreements. They further said the Nigerian government was prone to policy flip-flops, which heightened the risk of doing business in the country.
Following on this, investors into Nigeria’s telecom space have tended to come South Africa, India and other developing nations which tend to have similar outlooks and risks.
In July 2017, Thisday Newspaper reported that the British companies alongside Vodacom from South Africa were preparing to submit their memoranda of interest and technical presentations to the consortium of banks in a bid to acquire 9mobile.
Telecommunications experts say the outcome of the bids show that Vodacom seemed not have a fighting chance in Nigeria’s telecommunications market, as MTN, another South African competitor, already has a strong hold of the tough market with over 37 percent market share.
Asked about the chances of finding new investors, Boye Olusanya told BusinessDay at the official launch of the 9mobile brand in Lagos, months back, that the company was not particular about whether the new investors will be foreign or local and that 9mobile would be ready to dance to the tune of the investor.
“We are here today with a brand that exists for Nigerians. If at any point in time, someone comes in with an offer that is attractive, the investor would have the right to do whatever they want to do with the brand,” Olusanya said, in answer to a question from BusinessDay.
Experts say British investors willing to acquire 9mobile are more likely to focus more on data and innovative related services, in response to economic realities and market trends.
9mobile, with about 18 million subscribers, has been fighting hard with a view to catching up with other operators in Nigeria’s tough operating market who are leading by a substantial margin.
“The market competition is clearly dominated by MTN, which although has lost a few million subscribers in the last year or two, as a result of a huge regulatory fine, has the capacity to cope with economic challenges because of its infrastructural advantage. That is the ownership of both the 2.6GHz spectrum frequency and the 700MHz spectrum. It also has a laid underwater cable system which is the MTN West Africa Cable System (WACS). This clearly gives advantage of much wider coverage, advanced data capacity at a reduced cost,” Olusola Teniola, President, Association of Telecommunications Companies of Nigeria told BusinessDay in an emailed response to questions.
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