After my videocast on why I think that Glo will acquire Etisalat Nigeria, some have noted privately and publicly that MTN should not be discounted. Also, some have also explained that AMCON could come on board and save Etisalat Nigeria. This is my response and I do maintain that Glo is the best strategic suitor for Etisalat Nigeria. And neither MTN nor AMCON can help Etisalat Nigeria.
- MTN has Visafone and going for Multichoice. It is #1 and no regulator will approve it to swallow #4 thereby giving it more than 40 million subscribers above #2 (Glo). It will not happen. Also, MTN is owing Nigeria and any attempt to bring such amount of money to execute this deal will undermine its request that it has to pay Nigeria over years. MTN cannot be that stupid to even think of it because it knows it will not happen.
- Airtel cannot also do a deal because in India, Airtel is fighting for survival with Jio which is using massive discount to pull market share from Airtel and others. For Airtel to acquire Etisalat, it may have to sell assets in other markets.
- Consider outsiders like Vodacom/vodafone. They may not like to buy for #4 position. Buying Etisalat NG alone offers no major competitive advantage. Vodacom likes to be category-king. Being #4 may not be a good idea in my opinion. That is why I do not see a path for an outsider to jump in for #4. But if Airtel NG wants to sell, then Vodacom can come in for #3 and #4.
- AMCON will not bailout a telco because Etisalat is not a strategic asset to Nigeria. There are other companies doing what Etisalat does and a failed Etisalat will not have dire consequence to Nigeria’s economy. Besides, it is neither a bank nor in aviation sector. Plus, it has a foreign heritage. No one will do such a deal because Nigerians will cry foul if government wants to save Etisalat which might have noted it wanted a license to bring foreign capital into Nigeria. How will you justify a bailout?
- However, to avoid banks getting hammered with Etisalat default, AMCON can do a bailout and pay the banks. But to do that, it will first have a deal to auction Etisalat and not to run it. Running Etisalat to recoup $1.2B will be madness . The market is hot for anyone to make such profits for #4 telecom operator in Nigeria. The end result will be systematic collapse of Etisalat Nigeria
In summary, I do not think it makes sense for either MTN or AMCON to save Etisalat Nigeria. Glo remains the best strategic suitor for a deal.
Looming Job Losses
The Minister of Labour and Employment in Nigeria will tell you that no corporate firm in Nigeria should fire workers with reckless abandon. He is right, we need a humane attitude to it. Now is the time for him to come and save Etisalat workers by helping to effect a deal with the banks. If Etisalat is bought, there will be job losses from M&A. If government begins to make noise afterwards, it will be medicine after death. Now is the time for Chief Chris Ngige to fight for Etisalat workers in Nigeria.
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