NCC holds back approval for 9mobile takeover

27 July 2018

Mergers, Acquisitions and Financial Results

The Nigerian Communications Commission (NCC) is yet to grant regulatory approval for the finalisation of 9mobile takeover by teleology holdings limited, even after the company says it has successfully raised the $201 million bid balance and is ready to make payment, at the lapse of the 90days deadline given to close the transaction.


BusinessDay gathers that the meetings held by the telecommunications industry regulator with the owed banks and Security and Exchange Commission (SEC) on July 24, were inconclusive and resulted in a further meeting held yesterday, July 25, 2018 which also yielded no result as Tony Ojobo, Public Affairs Director, NCC confirmed that “there is no update on the meeting held to finalise the sale of 9mobile.”

Teleology holdings limited, had before now, successfully raised and made ready its balance of $251 million which was paid into an escrow account about two weeks before the July 25, 2018 deadline date. This is in addition to the initial $50 million paid as a non-refundable deposit on March 21 2018, to show commitment on the sale of 9mobile.

After receipt of the $50 million, NCC said it will carry out due diligence on Teleology Holdings Limited to ascertain the company’s technical capabilities and financial strength to take over operations of the debt ridden telecommunications company. However, the regulator has been unable to reveal details of its findings.

It was clearly stated in a letter written to Teleology in March 2018, that the non-refundable deposit would be forfeited in the case where the company fails to pay up the balance on or before 90 days which elapsed yesterday July 25, 2018.

Although the final decision on when 9mobile licenses and operations will be legally transferred to Teleology lies in the hands of the NCC, teleology has played its part by fulfilling all obligations as directed by Barclays Africa, the financial adviser to the owed banks.

However, analysts say that even though the board of NCC recently approved a new flexible regulation for transfer of license rights and obligations between operators, there may be a delay in regulatory approval for takeover by Teleology until all debts by the telco, including owed spectrum fees have been fully cleared.

“9mobile which formerly operated as Etisalat owes NCC spectrum fees of about N8 billion which should be two and a half percent of its gross profit. However, the company has been able to pay N2.4 billion out of the N8billion and has arranged a payment plan for the outstanding N5.5 billion. NCC might on this ground decide to delay approval for the new owners until all debts have been cleared,” a source familiar with the matter told BusinessDay.

 

Notwithstanding, it has been observed that the ability for 9mobile to pay out the sum of N2.4 billion to the telecoms regulator, even after recent strain on the business shows that the company is still viable and must have strong cash flows at the top line.

Teleology is said to have submitted a financial bid of $301 million dollars which saw it emerge as the preferred bidder in 9mobile’s sale process, leaving Smile Telecoms which bid a lower sum of $150 million cash as the reserve bidder.

Source: Business Day