Teleology gets 20days extension to acquire 9mobile but must pay an additional non-refundable $50m

Adrian Wood led Teleology Holdings Limited and prefered bidder for the acquisition of  9mobile has gotten a 20day extension from the Central Bank of Nigeria to enable it to complete the payment of the final bid price. This announcement came before the 90-days payment timeline earlier given to it lapsed on the 30th of June.

According to News Agency of Nigeria, a source close to Barclays Africa said the preferred bidder had however requested 20 working days’ extension from the CBN “to enable it to perfect the process for the final payout in consonance with the provision of the acquisition agreement.”

It is also reported that the request by Teleology was granted by CBN but with a proviso that it must pay additional non-refundable $50 million to further strengthen its stake in the acquisition bid for 9mobile. It would be recalled that Teleology had in March made payment of a $50 million non-refundable deposit for 9mobile in order to have full possession of its $500 million 9mobile bid. This will bring the total non-refundable deposit payment to $100 million.

Although there are concerns that the additional $50 million non-refundable deposit payment may stall the completion of the acquisition process but an NCC source confirmed to NAN that Teleology is raising funds beyond the cost needed for the settlement of the acquisition.

For this deal, Teleology will be getting its financial support from AfreximBank and UBS, which is raising equity from both the Nigerian and international investors. Teleology has eight Nigerian shareholders from the six regions of the country and the incoming executive management team has a lot of experience working in the telecommunication sector. Some of them have worked with MTN, Orange, Vodafone, and Celtel. These shareholders will be unveiled once the transaction is closed.

Teleology is under the stewardship of Adrian Wood, one of the past CEOs of MTN Nigeria. The former CEO of MTN is also forming an alliance with East Africa’s mobile operator, Safaricom in order to tap into M-pesa for mobile money services.

The Journey so far for Teleology-owned 9mobile

In 2013, a consortium of about 13 Nigerian banks led by Access Bank, GTB and Zenith Bank gave Etisalat a syndicated loan of $1.3 billion. This loan was expected to help refinance its existing loans and finance its working capital. $650 million was set aside for refinancing and the balance for network expansion.

As of 2016, the company had started defaulting on its loan obligations, which led to a few bailouts from its parent company in Abu Dhabi.

In early 2017, it was reported that the consortium of 13 banks, which lent money to the company 4 years prior, had threatened to take over the telco to recover the money.

CBN along with the Nigerian Communications Commission stepped into the situation to avoid a forced receivership. The consortium of Nigerian banks later requested that Etisalat UAE, main investor, Mubadala step in with another bailout fund but Mubadala hesitated. Mubadala stressed that Etisalat UAE’s insistence to divest from Etisalat Nigeria was part of its global strategy to reduce its several overseas interests.

Etisalat Nigeria then offered the consortium of Nigerian banks shares in the entity via a debt to equity swap deal, but the consortium of Nigerian banks declined the offer insisting on a bailout.

After several unmet deadlines, the consortium of Nigerian banks again put forward a deadline of 23 June 2017 for the Etisalat Group to come up with a solution or transfer its shares to a trust, which would be managed by an independent trustee.

On June 20, 2017, Etisalat Abu Dhabi announced that it had transferred 70 percent of its holding in Emerging Market Telecommunications Services Ltd (EMTS), comprising of 40 percent of its ordinary shares and 25 percent in preference shares respectively. EMTS is the vehicle it used to invest in Nigeria. After the exit, a new board was constituted to run the company pending when it finds a buyer and the name of the telco was immediately changed to 9mobile.

On the 22nd of February this year, Teleology Holdings emerged as the preferred bidder for the acquisition of 9mobile with Smile Communications emerging as the reserved bidder. In order to have full possession of its $500 million 9mobile bid, Teleology, led by Adrian Wood, made a $50 million non-refundable deposit for Nigeria’s fourth largest network operator. They are currently working on raising funds to pay back loans and complete the acquisition.