With Board Dissolution And Exit Of Hakeem Bello-Osagie, Here Are Options for Etisalat Nigeria

With Board Dissolution And Exit Of Hakeem Bello-Osagie, Here Are Options for Etisalat Nigeria

Etisalat Nigeria is floating. It is like a bride that no one really wants in the middle of a wedding. The UAE investors abandoned it in the hour of need. Now, the Chairman of the company has resigned. Businessman Hakeem Bello-Osagie resigned from the Board earlier today. The non-executive Board members had already resigned from the fourth mobile operator few days ago.

But the company has to move forward. The firm had noted that it would move ahead to establish a new management and appoint a new board. The Chairman had left after the restructuring plan for the telecommunications firm  was finalized. They have now a roadmap to execute, as it looks for ways, to manage the evolving crises in the firm. According to a statement, from Etisalat, all the important stakeholders had agreed on the plan.


The development reflects Mr. Bello-Osagie’s deep commitment to protecting the interest of all stakeholders. It is now expected that Etisalat Nigeria under its new shareholding structure will navigate through its current loan repayment challenge with minimum impact.

Over the last several months, the Chairman has worked extensively with critical stakeholders to prepare clearly articulated strategies and robust road maps that will mitigate the impact of the new shareholding restructuring and realignment on the operations and management of the 4th largest telecoms player in Nigeria,” the statement said.

Etisalat Nigeria owns consortium of banks more than $600 million on a $1.2 billion loan.  The foreign currency denominated loan was to help Etisalat upgrade its infrastructure. Unfortunately, when Nigerian economy went into recession, its business struggled, and the situation worsened that it could not service its debts, since 2016. Cascading events led to the exit of its major shareholders, non-executive directors and today, the resignation of its Chairman, Hakeem Bello-Osagie.

This is going to be a challenging moment for the fourth mobile operator in Nigeria, despite a finalized restructuring plan. Here are options Etisalat Nigeria may consider as it works to manage this challenging moment in its history.

  • Quickly setup a new Board. This board composition must comprise of leading and experienced telecom operators. Do not go into the temptation of flooding the board with bankers especially the creditors. The fact is, if care is not taken, there may be asset striping which will lead to the demise of Etisalat Nigeria. A mixed board with representatives from the banks along with industry veterans will be ideal.
  • A banker with limited telecom experience should not take over the Management of the firm. Etisalat Nigeria will be making grave mistake of hiring or using a banker to run the firm. We believe only industry operators can help improve the company’s fortune. The present Management may likely be asked to depart so that a new one can come in. But the focus will not be to strip assets by putting profitability over long-term survival of the firm. Etisalat, owing to its position in the industry, will need help at least for two years. That means, it may not have to pay dividends, to its investors.
  • Reduce product cost which can be attributed to the loss of more than one million subscribers in Q1 2017. Etisalat Nigeria which has one-third of MTN Nigeria subscriber base, lost nearly the same number of subscribers as MTN in Q1 2017 according to data from NCC (Nigerian Communication Commission), the industry regulator. Massive price reduction will help it tame the exodus. Etisalat, with the best QoS, cannot afford to be losing more subscribers compared to either Glo or Airtel which individually has millions of more subscribers than it. You cannot have the best service and yet be losing more customers. The simple reason is that the service is no more affordable, especially in a country on recession..
  • Pioneer new sectors  like AgTech to expand revenue sources. The reality is that pursuing and doing what MTN and Glo are doing will not help Etisalat in the short-term because the competitors enjoy better economies of scale. So discovering and focusing on new markets will be strategic for it to differentiate itself in the market.
  • List in the Nigerian Stock Exchange and work to find capital to repay the loan. It will be a very challenging one but Etisalat may not have a lot of options. For the fact that its major shareholder, largely abandoned it for less than $600 million, is not a good sign. It does imply that they could leave so much on the table for such an amount. (Etisalat Nigeria had noted that it had paid a huge part of the $1.2 billion loan.)
  • Plan for a sale once all the debt issues are managed and curtailed. The  fact is that Nigeria cannot accommodate #4 operator which is way behind unless that operator has capital to spend heavily to entice new customers.Where it becomes clear after two years that it is not making progress, the firm should put itself for sale. Glo remains a strategic partner that can help absorb it. It may not be all-cash-deal, of total buyout, but something closer to a merger of two un-equals since Glo may not have the cash to buy outright..

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