Why Nigerian Banks Or Etisalat Nigeria Acquirer Will Continue To Pay Etisalat UAE

Why Nigerian Banks Or Etisalat Nigeria Acquirer Will Continue To Pay Etisalat UAE

The crisis in Etisalat Nigeria is huge. But for the Etisalat UAE which owns the intellectual property of the brand, it may not necessarily be a killer. Whoever takes Etisalat  Nigeria will have to negotiate IP licensing deal with the Group. If that does not happen, the telecom regulator in Nigeria could revoke the license. To avoid that happening, anyone taking over must ensure that the original license owner feels very good.

The statement also reminded Etisalat and the banks what they cannot do with the collapsed company, owing to the conditions attached to the licensing.

“Sub section 1 – The grant of a license shall be personal to the licensee, and the license 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 licensee shall at all times comply by the terms and conditions of the license and the provision of this Act and its subsidiary legislation.

In the press release by Etisalat parent company in UAE (pdf), they noted that Etisalat Nigeria is owing them $52 million as of March 2017. This money is due to the parent company, no matter what happens.

There are many implications here:

  • Anyone that takes over Etisalat Nigeria must be paying IP for using the brand. If the person refuses, NCC can revoke the license. Etisalat NG cannot transfer its license. The easiest way will be to hold the license in Etisalat NG name to avoid NCC problems. That is part of ET Group IP which must be serviced.
  • Depending on the agreements, the banks may be sending cheques yearly to Etisalat Group to keep the brand. Changing the brand name may be hard. It means the new owner may spend millions of Naira to build a new brand and that will be difficult for a #4 operator. Many customers may be alienated in the process
  • Things are really not going well in Etisalat Nigeria. According to NCC March 2017, it lost the highest number of customers in Nigeria

Tomorrow is the D-Day when the transfer will be made. The parent company has already written off the value of its stake to zero in Etisalat Nigeria. But that does not mean it will not be getting IP licensing fees on Etisalat Nigeria.

NCC licensing requirement makes a transfer deal with another company challenging. Provided Etisalat Group owns the brand and license, in future, if there is no transfer of license to avoid NCC problems, dollars will be hitting Etisalat UAE bank account yearly from Nigeria.

 


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