SM | ECONOMY
will further erode whatever latitude operators had hitherto utilized to boost financing , revenue and profit .
Given the acrimonious manner by which Etisalat pulled out of the country , Nigeria may now find it difficult to attract investments from the Gulf states . With the recent slump in global oil prices , Middle Eastern countries , particularly UAE and Saudi Arabia , have ramped up investments worldwide as part of efforts to diversify their oil-dependent economies . Saudi Arabia has launched a plan to add up to $ 2 trillion to the country ' s sovereign investment fund in order to diversify government revenues through dividends from investments .
In the wake of the Etisalat saga , Nigeria may be overlooked as a possible investment destination by some of these Gulf countries , who work together as members of the Gulf Cooperation Council . It certainly doesn ' t help Nigeria ' s case given that Etisalat ' s majority shareholder is the UAE government and Mubadala , the erstwhile second partner in Etisalat Nigeria , is the sovereign investment arm of the Abu Dhabi emirate .
Exactly what caused Etisalat ' s inability to meet its loan obligations was a muted public debate during the weeks of the difficult negotiations . Etisalat Nigeria had in 2013 obtained a seven-year loan facility of $ 1.2 billion from 13 local banks and their foreign counterparts to refinance a $ 650 million loan as well as fund the expansion of its network . The refinancing already indicated Etisalat was struggling with liquidity . Why the UAE group failed to inject new capital in less-costly financing suggested some disillusionment with the company . This aloofness to the servicing of the $ 1.2 billion facility characterised the position of the Etisalat Group .
The undercurrent of this would be that Etisalat Nigeria was playing from a position of weakness , compared with the other three mobile telecoms giants , who command significantly larger market shares . Etisalat had wanted to use the number portability policy to win dissatisfied subscribers and increase its market share , but this didn ' t bridge the gap . This may be instructive for potential investors in 9mobile . Being a back-bencher among the top four can be perilous .
It was suggested that Etisalat Nigeria might have been misgoverned . Whether this is true or not , its board has been sacked . 9mobile now has a new board , representing the new stakeholders .
Finally , opinions were more unified that Etisalat Nigeria would have suffered from the sharp depreciation in the exchange rate since the loan was contracted in 2013 . Between 2013 and end of 2016 , the naira had depreciated against the dollar by over 80 percent , while a debilitating dollar scarcity has bedevilled the forex market since oil prices slumped from its peak in 2014 .
Etisalat ' s departure from Nigeria appears on the surface to be a business investment that went sour after stakeholders failed to reach an agreement . But on a closer look , the effects of that misadventure may haunt the Nigerian market for years to come .
30 | NOV . 2017