9mobile shuns Smile Telecoms as acquisition deal gets messier

9mobile shuns Smile Telecoms as acquisition deal gets messier

The strive to acquire 9mobile, the ailing mobile carrier in Nigeria is getting messier by the day.

While Teleology Holdings, the preferred bidder as announced by Barclays Africa has not been able to take over the company due to various legal tussles, Smile Telecoms Holdings, the second preferred bidder is now locking horns with 9mobile to reconsider its bid for the company.

To make good its goal, Smile Telecoms did write a letter to the management of 9mobile requesting a review of the bid process on various arguments relying on its capacity, financial strength and experience.

Defending the company’s stance for the review, the Executive Director, Operations, Smile Communications, a subsidiary of Smile Telecoms Holdings, Mr. Ahmad Farroukh, told ThisDay Newspaper, that his company

“Bring three-dimensional values to 9mobile if given the opportunity to acquire it. The first value is that we are Nigerian company already existing in the Nigerian telecoms space. So we will come up with our existing assets to boost the 9mobile operations. We will seek the permission of NCC to flip our existing 800MHz frequency to 9mobile to enhance its operations. What we are bringing to 9mobile is huge.

“The 800MHz frequency, which Smile Communications currently operates on, will be added to that of 9mobile to achieve the best frequency ever that will serve the customers better and help 9mobile to come out of its current challenges. Without exaggerating, we are sure to add additional 600 Base Transceiver Stations (BTS) of Long Term Evolution (LTE) technology, into the operations of 9mobile within a space of 90 days, if given the opportunity to acquire it.

“We will from day one, integrate our existing facilities with that of 9mobile to get the company back to its old good days, when it was the best voice and data telecoms company in Nigeria. 9mobile currently has 500 BTS across the country, and by the time we add our 400 existing BTS and combine it with the 600 BTS that we can provide within 90 days, 9mobile will be having approximately 1,500 BTS, which will match the number of BTS that the largest telecoms operator in the country currently has. So should we acquire 9mobile, we will make it competitive from day one with unprecedented speed of service delivery.”

He added, “The second value that we will bring to 9mobile is the monetary value. We will bring in fresh millions of dollars from foreign financing outside Nigeria, into 9mobile to pay off its indebtedness to the banks and also pay off any other group that the company is indebted to, and we will still have enough to invest in 9mobile and make it competitive. Let me tell you that several countries around the world still believe in the Nigeria story and we will reach out to them to get fresh funds to invest in 9mobile.”

Farroukh said that the third-dimensional value that Smile Telecoms Holdings will bring to 9mobile, according to him, is about the company’s long standing experience in telecoms business.

“I have handled telecoms business in Nigeria, including being the CEO of MTN Nigeria from 2006 to 2011, before I was appointed as Director to oversee the MTN West African operations, before joining Smile Communications. Nigeria has made me what I am today and I am grateful to God and to Nigeria. In Smile Communications and Smile Telecoms Holdings, we have seasoned telecoms experts and we are bringing that expertise to 9mobile if given the opportunity to acquire it. We are convinced that our three dimensional values will make 9mobile a successful company if we are allowed to manage it,” Farroukh said.

His argument was buttressed by Managing Director of Smile Communications, Mr. Godfrey Efeurhobo who said the company is a big player “In the Voice over LTE segment of the telecoms business. We have the capacity to offer full Voice over LTE, which is the VOLTE service, and as the device ecosystem expands, we also intend to expand our VOLTE services and we are currently discussing with various original equipment manufacturers (OEMs) to expand the device ecosystem. So we have the capability to offer Voice over LTE. The only limitation is the device ecosystem and we are building on our data and device ecosystem in order to connect more subscribers to our network.”

A telecoms expert told PageOne.ng that whether Smile has what it takes to upstage Teleology Holdings cannot be proven as the latter is a new player in the market with no track record that could be evaluated.

However, the matter took a turn for the worse when 9mobile through its lawyers wrote backt to Smile Telecoms, warning that the company should desist from legal threats and calls for review and reconsideration of its bid.

According to ThisDay Newspaper, the company’s lawyers, Olaniwun Ajayi wrote Smile Communications on May 14, 2018, warning it to desist from presenting false information about 9mobile sale.

”We would like to refer you to the process letter for phase 111 of the transaction, particularly the second paragraph is Appendix B therefore, which stipulates that the company, the lenders and Barclays Africa reserve the right at the sole discretion and without liability to change, suspend or terminate the procedures set out in the process letter at any time and in any respect, to reject any and all proposals and to terminate negotiations and discussions at any time and for any reason, without being obliged to give prior notice or reasons therefore, with any or all potential purchasers and to negotiate with any party in a manner and to a timetable other than that outlined in the process letter….As you understand, by your continued participation in the process, Smile confirmed its acceptance of the foregoing terms, amongst others, agreeing to be bound thereby, in the circumstance, the basis for the complaints and threats of legal action in your letter is unclear, as are your intentions in this regard.

Please note that the Company and lenders hereby reserve their rights to pursue all remedies available under all applicable laws,” the statement said.

It is not clear if Smile Telecoms would make good its plans to institute legal actions on the matter. The company had already testified before the National Assembly claiming that Teleology, the preferred bidder did not have the requisite technical capacity.

However, it seems 9mobile is also building its case against Smile Telecoms. There are revelations (although not proven to be true or false) that Smile Telecoms has about $125 million in debt on its neck that has not being serviced adequately. Media report alleged that Smile and its directors have not been servicing the debt as at when due.

ThisDay Newspaper claimed in the report that “Smile Communications got the loan through a consortium of banks including, Afrexim Bank, and in turn routed the loan through a domestic bank, Diamond Bank resulting in the lenders huge non-performing loans”.

The report also alleged that Smile Telecoms did not disclose such material facts in its bid. This is a major dent on its position as the second preferred bidder should Teleology fail to finalise its payments to take over the company.

In a quick rebuttal, Smile Telecoms sent out a statement refuting that it is in a debt crisis claiming that the media report was:

“A ploy to derail the ongoing investigative hearing on the 9mobile acquisition bid process currently ongoing at the House of Representatives Committee on Telecommunications.”

The Federal House of Representatives is yet to conclude its investigations into the matter.

As it stands, there are about two court cases on the acquisition. One by Spectrum Wireless, a former shareholder in Etisalat who claimed that its interest was not considered in the acquisition process. Dahiru Mangal, a former shareholder of 9mobile had also sued the company claiming he had shares in the company and was not considered in the negotiation to sell the company.

All these facts, accusations and legal tussles are expected to further complicate the sale of a company in dire need of financial aid and restructuring to remain in business.

The operator data released by the National Communications Commission, NCC, showed that 9mobile’s customer base has witnessed a serious decline since its debt saga started in 2017.