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Etisalat Woes Deepens over $1.2Bn Debt

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The fate of Etisalat Nigeria, the fourth largest telecommunications network operating in the country, hangs in the balance as the telecom giant battles to pay its creditors, according to the Nation.

Etisalat Nigeria had in 2013 obtained a seven-year loan facility of $1.2billion from 13 local banks and their foreign counterparts to refinance a $650 million loan as well as the expansion of its network but the company had missed the payment due to dollar shortfall in Nigeria’s financial system.

The loan, which involved a foreign-backed guaranty bond, was for Etisalat to finance a major network rehabilitation and expansion of its operational base in Nigeria.

The 13 local banks involved in the loan deal include: Zenith Bank, GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank, and Union Bank.

According to the Nation, Abu Dhabi state investment fund Mubadala, the second-largest shareholder in the business, had in April presented a final restructuring plan to the banks which they flatly rejected. The banks further gave a one month window for repayment which lapsed in May 31st, 2017.

The telecoms company unable to redeem its payment, the banks have since issued Etisalat a default notice.

This is just as The Nation learnt at the weekend that Etisalat Nigeria is working with its lenders and Abu Dhabi state investment fund Mubadala, the second-largest shareholder in the business, to resolve debt woes it said were caused by a devaluation of the naira currency.

Mubadala spokesman Brian Lott told Reuters on Friday that a local media report saying that the fund has pulled out of Etisalat Nigeria was wrong and that several proposals are under discussion.

He declined to elaborate on the options being considered but said he will know more next week.

The Nigerian affiliate of Abu Dhabi-listed Etisalat has said it is in talks to restructure a $1.2 billion loan after missing a repayment, though sources have said that talks reached a deadlock on April 28.

In a statement by Ibrahim Dikko, Vice President, Regulatory & Corporate Affairs, Etisalat Nigeria, the company described as spurious news report that Mubadala Development Company, the majority shareholder of the company is exiting the business.

In the statement which reads in part, Dikko said: “Whilst it is premature at this stage of the ongoing discussion to affirm that this is the conclusive option, Etisalat Nigeria considers it pertinent to state that parties in the negotiation are considering a number of options and discussions are at an advanced stage regarding the syndicated loan agreement with the banks. It will therefore be presumptive and in bad faith to begin to predict the outcome.”

Etisalat Nigeria, he stressed, “Can confirm that negotiations with the consortium of banks regarding the syndicated loan agreement signed in 2013 have reached an advanced stage. As noted in an earlier statement, we are considering a number of options and are not taking anything off the table at this time.”

Etisalat, he further emphasised, “Remains a viable business, having recorded its best financial year in 2016. So parties are keen to ensure that the ongoing discussions and eventual outcome do not affect the day to day operations of the business whether now or after the announcement of our agreement. All parties have continually demonstrated an interest in the continued operations of Etisalat as a business as it remains a backbone of millions of small business owners; multinationals, government and indeed Nigerian subscribers in general.”

However, it does appear that the apex bank and the regulatory agency in charge of the telecoms sector are not willing to stick their necks out for Etisalat again judging by their mute indifference to the lingering crisis involved the embattled telecom company and the banks.

When our correspondents broached the subject before the CBN spokesman, Isaac Okoroafor, Acting Director of Corporate Communications at the weekend, his rather terse response spoke volumes. “Call the Etisalat people please. We have nothing to say on that.”

His counterpart at the NCC, Tony Ojobo, informed our correspondent that he was going to get back soon but never did as at the time of filing in this report.

In the view of industry experts, the future of the telecoms sector looks bleak without Etisalat. One of those who share this sentiment is Mr. Olusola Teniola, National President, Association of Telecommunications Companies of Nigeria (ATCON), the umbrella body of telecoms companies.

Speaking with our correspondent at the weekend, Teniola said the issue of Etisalat leaving is a very complex question, as the insinuation describes a scenario whereby the subscribers on their network can be easily accommodated by other networks, which is not necessarily the case.

According to him: “No single network as currently configured and engineered can provide the requisite capacity to cater for any additional traffic burden a collapse of any single mobile network operator with over 20million subscribers will cause. It is more feasible that a more likely scenario of a merger or acquisition will occur in the form of an international player coming in to ensure continuity of Etisalat’ operations. This is more of a preferred scenario that should occur anything else will be disastrous for the consumers’ choice.”

Options before Etisalat, banks
Among the many options before Etisalat is to sellout its entire equity. The telco also ran into problem in Tanzania when the owners refused to put in more money. Specifically, United Arab Emirates telecom operator Etisalat had in 2015 sold its 85 percent stake in Zanzibar Telecom Limited (Zantel) to Sweden’s Millicom.

Zantel, which has struggled against larger rivals Vodacom and Bharti Airtel, got up to $32million in net current liabilities at close of the deal, Etisalat said in an emailed statement.

Etisalat received $1 in cash while Millicom assumed the total debt obligations of $74million under the terms of the agreement subject to regulatory approval by the Tanzanian Communication Regulatory Authority.

According to a source in one of the dealing banks who asked not to be named, one of the options the banks proposed to Etisalat management as a middle way out of the crisis was for it to request for a bankruptcy status.

The official, who requested that his name should not be revealed, since he was not authorised to speak on behalf of the consortium, said the bankruptcy option would require having receivership management appointed by the banks to oversee its operations.

The other option before Etisalat is to go into a merger with the existing telcos operating in the country. Already MTN had in the past signified interest to buy Etisalat but had to back pedal following its trouble with the NCC over unregistered sims.

However, reliable sources say Globalcom may also be interested in Etisalat buyout but the telecom giant is said to be keeping its plan under wraps.

One of the options before the banks is to approach the court and get the board dissolved and take the company into receivership. But the challenge however is that the banks can’t run the firm because they don’t have operating license neither do they have the technical knowhow to do so.

But, the NCC appears not to be favourably disposed to the takeover proposal, the source said, as it believed that Etisalat is not only a viable going concern but also willing and able to negotiate the servicing of its loans.

Etisalat has the option of running to NCC for help but informed sources say Etisalat has not been carrying them along. But the NCC sources say they are ready to protect the over 21million subscribers on the network.


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Telecom

US Newspapers Sue OpenAI, Microsoft Over AI Chatbots

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Eight US newspapers sued OpenAI and Microsoft in a New York federal court Tuesday for violating their copyright to train the technology behind the ChatGPT and Copilot chatbots.

The newspapers, which include The New York Daily News and The Chicago Tribune, are owned by Alden Global Capital, a Florida-based hedge fund that created the second-largest US newspaper group behind USA Today owner Gannett when it bought the Tribune publishing chain in 2021.

“This lawsuit arises from defendants purloining millions of the publishers’ copyrighted articles without permission and without payment to fuel the commercialization of their generative artificial intelligence products, including ChatGPT and (Microsoft’s) Copilot,” according to the filing.

“As this lawsuit will demonstrate, defendants must both obtain the publishers’ consent to use their content and pay fair value for such use,” the filing said.

OpenAI and its Microsoft backer were also accused of offering up verbatim excerpts of full articles as well as attributing misleading or inaccurate reporting to the publications in certain requests.

Other newspapers involved in the suit were The Orlando Sentinel, The Sun Sentinel of Florida, The San Jose Mercury News, The Denver Post, The Orange County Register and The St. Paul Pioneer Press.

In a statement, OpenAI did not refer to the accusations specifically but said “we take great care in our products and design process to support news organizations.”

OpenAI pointed to the “constructive partnerships and conversations with many news organizations around the world to explore opportunities, discuss any concerns, and provide solutions.”

This referred to the news outlets that have entered partnerships with the Microsoft-backed startup instead of going to court.

They include The Associated Press, Financial Times, Germany’s Axel Springer, French daily Le Monde and Spanish conglomerate Prisa Media.

The suit on Tuesday closely resembles a case filed by The New York Times in December, in which OpenAI is also accused of stealing content to train its powerful AI.

In that case, OpenAI strongly pushed back, arguing the use of publicly available data including news articles for general training purposes is fair use.

OpenAI also accused the Times of violating ChatGPT’s user guidelines to generate the content that suited its case.

Microsoft declined to comment on the suit.

AFP


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5G Subscriptions Hit 2.7m in Nigeria –NCC

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Nigeria’s mobile network landscape is seeing a gradual shift towards newer technologies, with 5G subscriptions reaching 2.7 million in March 2024, according to the Nigerian Communications Commission (NCC).

5G Subscriptions Hit 2.7m in Nigeria –NCC

This translates to a 1.24 per cent penetration rate.

While this represents steady growth compared to December 2023 (1.04%), 2G remains the dominant network choice, accounting for over half (56.97%) of all connections. 3G holds a 9.04% share, while 4G subscriptions have grown significantly from 25.06% in May 2023 to 32.74% in March 2024.

The high cost of 5G-compatible smartphones is a major barrier to wider adoption. Although all three major operators – MTN, Airtel, and Mafab Communications – offer 5G services in select cities, expanding coverage and affordability remain key challenges.

MTN launched the first 5G network in September 2022, followed by Airtel in June 2023. Mafab entered the market later in 2023. All three companies are aiming to expand their reach, but the high cost of 5G devices is a significant deterrent for many Nigerians.

According to Mohammed Rufai, chief technical officer, MTN, maintaining older networks (2G and 3G) alongside newer ones is necessary due to device compatibility issues.

This highlights the need for a wider range of affordable 5G-compatible phones to truly unlock the potential of this next-generation technology in Nigeria.

 

 

 

 

 

 


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Experts Seek Stricter Regulation against Call Masking, SIM-Boxing Fraud

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Experts have called for stronger laws and stricter regulation to tackle security issues around call masking and Subscriber Identity Module (SIM)-boxing-related fraud in Nigeria, according to the Nation.

Experts Seek Stricter Regulation against Call Masking, SIM-Boxing Fraud

Call masking or refilling is a practice in which international calls are terminated in Nigeria as local numbers, using illegal SIM boxes loaded with several numbers.

It is a deliberate attempt by fraudsters to avoid paying the correct International Termination Rate (ITR) for international calls, paying instead the Local Termination Rate (LTR).

For example, when the number is masked as a local call, an operator pays N3.90 LTR and not N24.40 ITR.

The process allows operators to terminate inbound international telecoms traffic as local calls, so they do not have to pay ITR, which is the interconnection charge set by telecoms traffic carriers as carrier-to-carrier charges.

A SIM Box fraud is a setup where fraudsters install SIM boxes with multiple prepaid SIM cards.

A fraudster can bring calls through VOIP (through the internet) and terminate international calls through local phone numbers from a country, to make it appear as a local call, by initiating the call through a local SIM installed in the SIM box.

About three years ago, when the issue came to the limelight, the Nigerian Communications Commission (NCC) carried out some investigations, leading to the sanctioning and suspension of some operators earlier this year.

Some of these suspensions were later lifted.

The Office of the National Security Adviser (ONSA), the National Intelligence Agency (NIA), the Department of State Services (DSS), and Committees of the House of Representatives and Senate have on several occasions expressed concern about the menace.

While many stakeholders believe that the menace has been nipped in the bud, it has continued to rear its ugly head to the bewilderment of experts and stakeholders.

Ikechukwu Nnamani, president/chief executive officer of Medallion Communications Limited, lamented that it is a subject matter, which NCC should address completely.

Nnamani, who is an executive member of the premier telecom body in Nigeria – the Association of Telecommunications Companies of Nigeria (ATCON), said almost all calls he received recently are masked.

“Sometimes, I don’t pick up calls because I do not know the number only to find out later it was an international call.

“The truth is that I don’t know why this has not been resolved, I expected it to have been solved.

“Honestly, I would not know why. One would have expected them to have sorted all these out by now,” he said.

Chief Deolu Ogunbanjo, president of the National Association of Telecommunications Subscribers of Nigeria (NATCOMS) said there was no need to relent in reporting the menace to the right authority.

He said it could be a plan to ensure that gain accrued to some people. “I don’t know whether call masking favours the operator or it is being done deliberately.

“It is a situation that the telecoms should deal with because it is a technical problem. I think it is some of those unlicensed operators doing all these.

“Some of these operators’ facilities are being tapped into; they need to look into their operations, so they can be taken care of.

“If they are still in the habit of doing it, proper sanctions should be meted out to any erring service provider.

“There should be heavier sanctions. They can’t be short-changing subscribers and at the same time, the government,” he said.

Mr. Ajibola Olude, executive secretary of the Association of Telecommunications Companies of Nigeria (ATCON), believes the issue can be addressed.

“When it comes to technology, you can only address it maximally. It is not as rampant as before and it is an international issue.

“We have addressed it before and we will look at it again.

“About four years ago, when it happened, we deployed all the resources within our capacity to address it and I think it was addressed maximally.

“I have not seen any operator complaining, except now that you are raising the issue, but as far as we know, call-masking is no longer a problem.

“I am going to contact our compliance monitoring to enlighten me about what is going on, but it is no longer an issue,” he said.

Mouka Reuben, director, Public affairs, NCC, said the situation has been tackled before and he does not think it was a major issue again.

He, however, promised that the commission would look into it again to find a way out.

NCC recently put the revenue lost to call-masking and SIM-boxing activities in the country at $3 billion.

This is as telecom operators lamented during the 85th edition of the Telecom Consumer Parliament in Lagos that they were losing about N2.5 million minutes per day to these fraudulent activities.

On actions that had been taken by the commission to combat the menace, Prof Umar Danbatta,  former Executive Vice-Chairman, NCC, said the NCC had tightened the SIM registration process across all networks to reduce the availability of SIM cards for SIM-boxing as well as address the security issues around the availability of pre-registered SIMs.

According to him, the action was necessary as some arrests made in Lagos two weeks ago showed that the perpetrators of SIM-boxing had over 100 SIM cards registered with fictitious names and used them to divert international calls.

Credit: The Nation


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