As foreign and local firms jostle to acquire 9mobile, Chika Amanze-Nwachuku and Raheem Akingbolu examine the strengths and weaknesses of the top contenders
In June this year, the media was awash with reports that Etisalat Nigeria (now 9mobile) would be taken over by a consortium of banks following its default on a loan repayment scheme of $1.2 billion due the local banks.
Etisalat as it then was had cited the economic downturn and its effect on the naira as the reason for its default in servicing the loan.
The crisis forced the Abu Dhabi’s Etisalat, which held a 45 per cent stake in the firm to terminate its management agreement with its Nigerian arm after talks with its lenders to renegotiate the loan failed.
However, the Central Bank of Nigeria’s (CBN’s) intervention saved the company from collapse and prevented its creditors from putting it into receivership. The development also led to a change in its board and management, as well as the new brand name-9mobile.
Though the brand has since moved on, it is still like a one legged man, who needs crutches for support, hence the need for a new investor to revitalise the ailing firm.
In October, 16 firms had submitted expressions of interest (EoIs) to Barclays, which has the mandate to handle the sale of 9mobile, after Citigroup and Standard Bank, previously in the running for the role, were dropped.
Five Firms Shortlisted
Already, five firms have been prequalified for the next stage by Barclays. The five entities are telecom giant, Globacom; Airtel, Smile Communications, Helios, and Teleology Holdings Limited.
The Executive Vice-Chairman of Nigerian Communications Commission (NCC), Professor Umar Danbatta confirmed the emergence of the five firms at the 82nd edition of Telecom Consumer Parliament in Abuja recently.
He said that the five shortlisted firms for 9mobile have been allowed to access the firm’s data room to enable them access its financial situation and subsequently make bids for its takeover.
Danbatta also gave a firm assurance that due diligence would be carried out on the financial and technical capacity of any potential bidder, adding, “In the final analysis, we will like to see a 9Mobile taken over by a bidder who has the financial and technical capacity to improve on the operations of the telco and add value in delivery of qualitative telecom services in the country.”
Grandmasters of data, Globacom Nigeria Limited, Nigeria’s second largest network operator was founded in 2003 by business mogul, Chief Michael Adenuga; India’s Bharti Airtel, operating as Airtel in Nigeria; Smile Telecoms Holdings, is a Pan-African telecommunications group with operations in Nigeria, Tanzania and Uganda; Helios Towers was the former owner and operator of the largest telecoms tower network in Nigeria and other countries, before it sold its Nigerian infrastructure to HIS and Teleology Holdings Limited, a special purpose vehicle led by a former chief executive of MTN Nigeria, Mr. Adian Wood, and Ericsson.
According to THISDAY investigation, promoters of the various brands are currently working round the clock to take over ownership of 9mobile. The winner will eventually get the nod to own the fourth largest telecom operator in Africa’s most populous country.
Strengths and weaknesses
Considering the credentials of the various firms that have been shortlisted in the race to acquire the brand, they all look good given their business heritage. However industry experts argue that beyond their financial status, many other things need to be considered to give the 9mobile brand a seamless transition. In line with this, industry analysts have suggested that for the exercise to be perfect, technical and infrastructural strengths should be considered in the deal to sustain the tempo of the telecom company in the market.
The company that has technical experience and infrastructural support to push the brand should be the choice, analysts said.
Interestingly, one of the shortlisted firms, Globacom appears to have both the technical and financial muscle to revamp 9mobile and imbue a new life into its business existence once again.
“From any angle one chooses to look at it, Globacom is the only network among other contenders that appears to be most equipped in terms of infrastructure to rebuild the capacity of 9mobile that will lead to its sustainability in providing telecom services to the Nigerian people”, said an industry expert.
Another analyst, Mr. Fadare Adekanmi, said the fact that the promoters of the Glo brand have firm understanding of the market will be an advantage. “Two things will make it easy for Globacom to take 9mobile through the market strongly. One is market understanding that is inherent in the patriotic seal of Mike Adenuga and his team. The other is technical knowhow, which enabled the company to change the game few years ago, when the then giants in the market insisted that per second billing was a tall dream. “I’m also aware that almost all the telecoms operators in the country are indebted to banks. Globacom appears not to be in the same boat. It is not known to be indebted to any banks and the company is running its operations smoothly without financials constraints.”
Adekanmi also argued that Glo is better poised to bring in the wireless Broadband revolution faster and to a larger cross-section of the Nigerian population because it already has the biggest 4G network covering the major cities in 700 Mhz band unlike any other operator in Nigeria.
He added: “Much as I will like any qualified firm to acquire the business, I still believe that Globacom as the Second National Career licence holder, which enables it to have fixed line, broadband, mobile telecommunication platforms, will be able to build the brand. Glo’s operation is boosted by its submarine cable from Europe which is laid across the length and breadth of Nigeria. Glo is the only operator who owns cutting-edge infrastructure including towers, generators, MSC and datacenter buildings and does not owe anyone for its assets on which the network is running.
“Glo has a robust Fiber network with huge capacity spreading across the whole land mass of Nigeria connecting all major towns to carry the traffic.
It is the only private operator in Nigeria that fully owns Submarine cable connecting Nigeria to Europe and the Americas and from there to the rest of the world.
“Besides, Globacom has the most experienced and competent workforce with years of experience in managing the complexities of rollout, integration and operation of a multivendor network with its own employee unlike others who rely on managed services.”
According to him, with this huge strength and capacity, Globacom has demonstrated that it is strategically positioned to acquire 9mobile and give its operation a facelift in terms of infrastructural investment, capacity and increase its reach to its customers in Nigeria.
9mobile at a Glance
At a time many people thought the telecommunications market had lost any room for expansion, Etisalat (now 9mobile) entered in 2008 as the fourth GSM operator with a promise that it would change the game. Of course, not a few analysts dismissed the promise as a dream of an ambitious brand. But to the promoters of the brand, who stated from day one that they had done enough market research before coming in, the brand promise turned out not to be a mere fluke.
Though the brand was left with very slim or no chance of survival, considering that the bulk of the high net worth and discerning subscribers at the heart of the market at that time already had at least one or two GSM network lines, but through articulated campaigns and exciting products, Etisalat quickly hit the ground running and became a brand to reckon with.
Deliberate and strategic brand differentiation, therefore, became necessary for Etisalat, as it’s stating the obvious that the network was contending with the challenges of being the fourth entrant. Thankfully, the telecommunication company got the message by creating innovative carrots to eat into the market share of existing operators. This share had given the early movers advantage through an undeniable seven-year head start. Also, the brand leveraged on the crest of innovation, youth and customer friendliness to build a strong equity.
Today, 9mobile, as is now known, has an impressive customer base of more than 21 million. It is also reputed for its generous freebies as well as for its relatively good internet services. It has won several awards based on quality of service indices and excellent customer service.