The recent crisis of confidence between Teleology Holdings, preferred bidder of 9mobile and its Nigerian local partners, resulting in the pulling out of the deal by the former is seen by analysts as tainting the country’s investment outlook.
Coming, even while the damage done to foreign investor confidence with MTN’s ‘avoidable’ row with Nigerian regulators is considered as a failure in yet another investor confidence test, the analysts further argue.
Already, some banks in Nigeria exposed to the $1.2 billion loan obtained by 9mobile, formerly Etisalat Nigeria, are beginning to express uneasiness over the reports of Teleology pullout from the telecommunications company.
Similarly, some stakeholders in the oil and gas industry are worried that the uncertainties surrounding the Petroleum Industry Bill (PIB) may persist in the New Year and nobody knows long it would take, with the attendant wrong signals to investors in the industry, particularly the International Oil Companies (IOCs).
Nigeria Employers’ Consultative Association (NECA) says Federal Government’s 2019 budget of N8.83 trillion is rested on faulty estimates and the $60 per barrel of crude which the budget is benchmarked is unrealistic and dicey, another disturbing signal from Timothy Olawale, Director General of NECA, after a careful review of the budget recently.
Also, trading activities on the floor of the Nigerian Stock Exchange (NSE), market with larger percentage of foreign investors, for almost the whole of last week, witnessed bearish activities during its trading sessions as the domestic bourse continued with uncontrollable shedding even as its emerging market peers rose 3 percent.
This is because the bears continued to dominate trading for almost all the days in 2019 with the crucial market indicators declining further with key performance indicators, the All Share Index (ASI), Market capitalization, dropping considerably.
They say all these developments would further scare foreign investors, even as the country may see further drop in crude oil prices and demand. The World Bank last week projected the global economic growth to soften from a downwardly revised 3 percent in 2018 to 2.9 percent in 2019 amid rising downside risks to the outlook.
Although some reports claim that Teleology Holdings may be pulling out of the deal on account of disagreements with its local partners, Sunday INDEPENDENT gathered that the decision comes as fallout of a back channel probe by the presidency after trending allegations that Ismaila Isa Funtua, a close associate of President Muhammadu Buhari, acquired majority stake in the telecommunications company, using bank deposit from Keystone, a government acquired bank.
Teleology Holdings is a special purpose vehicle comprised of telecom industry veterans and led by pioneer chief executive officer of MTN Nigeria, Adrian Wood. Sources close to the 9mobile organisation told our correspondent that Teleology Holdings had become increasingly uncomfortable with actions taken so far by the local partners.
Insiders told the newspaper that Woods, CEO of the Holdings, and who is believed to have helped Funtua in the acquisition of the majority stake in 9Mobile is smarting from the fall out of the revelation and is looking out for a quick exit from the deal that has gone toxic.
An inside source from the presidency told the newspaper that there had been petitions made to the presidency on the deal. “There was one submitted by a powerful traditional ruler with a vast network at the Central Bank of Nigeria, CBN, detailing alleged use of money from keystone Bank in the purchase of stakes in a GSM company,” explained the newspaper’s source.
The matter was initially discountenanced by President Buhari. The president is said to have long haboured misgivings for the traditional ruler the manner he blew whistle on some shady forex deals in the past. “Mr President believed, at the time the matter was brought to his attention that the ruler had a personal grudge against Funtua. But the last one-week has seen the public and social media platforms fizz over detailed shady deals allegedly perpetrated in the acquisition deal of the telecommunications company.
According to reports, Teleology is backing out of the 9Mobile deal because it has become uncomfortable with actions taken outside of the agreed business plan, since the November 12, 2018 formal take-over of 9mobile. Teleology Holdings is said to have been blocked from concluding a management services contract with the local joint venture, Teleology Nigeria Limited. While the report is silent on who is blocking the contract, Teleology is said to rue the development because the management services contract would have enabled it and its team of experts oversee the implementation of the organisation’s elaborate business plans including funding proposals.
Teleology won the bid ahead Smiles, another company pundits tipped ahead to win 9Mobile bid. When Teleology took over 9Mobile as the preferred bidder, an important part of its agenda is to double 9Mobile’s 3G/4G cell sites. It is also set to add new fiber optics cables stretching thousands of kilometres, accoding to blueprints laid out.
Teleology is intent on using 9Mobile to increase Nigeria’s employment rates. The telco says it is targeting an increase in 9Mobile’s staff by up to 50%. This is a huge deal, especially for current staff members who fear the company would downsize instead. In all, the new agenda seems holistic. It captures Teleology’s vision for 9Mobile, as well as presents the company as technically competent.
But the clincher was the $50 million initial deposit made by Teleology to consummate the deal. But other sources averred that fight broke out between Woods and Funtua over the running of the 9Mobile, which in turn led to the cat being led out of the bag as to how the deal in 9Mobile went down.
According to trending account, Funtua allegedly edged out Adrian Woods out of management. Consequently, it was alleged that Teleology Nigeria replaced Teleology Holdings to remove any influence of Adrian Woods from 9-Mobile totally, after he was said to have secured $260 Million from African Exim Bank, which aided the approval of the sale by NCC, though without meeting 90 percent of the conditions set up ab-initio by the NCC.
It was alleged that Funtua closeness to the president and connection with CBN is said to have been critical in the actions taken so far. Through this influence, he was said to have leaned on AMCON management to buy tidy up the deals.
As the country’s fourth largest telecoms firm, 9mobile (formerly Etisalat Nigeria) was pushed to a tight corner when in June 2017, Mubadala Development Company of United Arab Emirates, the company’s largest shareholder pulled out its investment and headed out of the country.
The development propelled the Central Bank of Nigeria (CBN) and its telecoms industry regulator, Nigerian Communications Commission (NCC) to intervene and save the service provider from collapse after talks with local banks to renegotiate a $1.2bn loan failed.
However, there was high hope after Teleology Holdings Limited emerged as the preferred bidder for 9Moblie. The expectations became higher when with the confirmation that Teleology beat the deadline to deposit a non-refundable $50 million out of the controversial sum of $500 million it offered to buy the struggling telecommunication firm.
To his credit, Adrian Wood was the Chief Executive of Officer of MTN Nigeria between 2001 and 2004, a period that witnessed the aggressive penetration of MTN into the Nigeria market terrain, during which the foundation for the achieved fame of the brand was laid. Industry analysts were optimistic that the feat Wood brought to the fore would be repeated in 9Mobile through Teleology Holdings Limited.
But like a thunderbolt, Teleology Holdings Limited suddenly began to exit from its shareholding in the local joint venture due to dissatisfaction over the business relationship with its local partner, 9mobile Nigeria.
During the week, there were reports of Teleology Holdings Limited pullout and exit of Adrian Wood from 9mobile. The telecoms company disclosed the reasons behind the sudden development which is already causing uneasiness among the stakeholders of the company.
In a statement issued by 9mobile, signed by Oluseyi Osunsedo, Director, Regulatory and Corporate Affairs on behalf of 9mobile Board of Directors, and made available to Sunday INDEPENDENT, the company confirmed Teleology pullout and Adrian Wood’s exit, describing the action as unfortunate but inconsequential.
According to 9mobile, “Teleology Nigeria Limited is a consortium including several local and foreign investors. While every partner in the consortium was delivering and meeting their obligations to the partnership in terms of financial resources, physical availability for crucial meetings and extensive network to help build the business, Mr. Adrian Wood’s Teleology Holdings Limited, which only owned a minority stake in Teleology Nigeria Limited, failed severally and wholly to meet theirs. Mr. Wood was not personally present for all the critical presentations made by the consortium during the bid process and failed abjectly with his financing arrangements with Swiss-based UBS Bank. In all these failings, other partners in the consortium filled the gap and pushed ahead until the sale was completed.”
“Since taking over the company, and without any assistance from Mr. Wood or Teleology Holdings, the Board has revived and enhanced relationships with key vendors and core business accounts; improved business relationships with suppliers; enhanced its core network capabilities to deliver network efficiency competitively with other operators. With the assistance of leading global consultants, the company is also undertaking a complete review of its operational, regulatory, financial and technical architecture. On this basis, 9mobile has emerged from a period of uncertainty over the past two years to attain an active subscriber base of 16 million, representing a net increase of over 1 million subscribers in the last 6 weeks alone.”
The post Nigeria Fails Yet Another Investor Confidence Test On 9Mobile Crisis appeared first on Independent Newspapers Nigeria.
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Author: Nicholas Uwerunonye