Bharti Airtel, Helios petition Nigerian government over 9Mobile sale deal, cite irregularities

Bharti Airtel International, owners of Airtel Nigeria and UK private equity firm, Helios Investment Partners, have petitioned the Nigerian government over the ongoing process to sell 9mobile, formerly Etisalat Nigeria, citing alleged irregularities in the sale process.

The two companies that ended up among bidders shortlisted to buy 9mobile, according to Technology Times, a Nigerian online medium focused on the technology sector, have petitioned the Nigerian government to look into allegations that the 9mobile bidders were hampered from assessing the viability of the mobile phonecompany’s business and the current status of its operations.

Aside government, telecoms and banking regulators supervising the transaction alongside their appointed transaction adviser, Barclays Africa, were copied in the petition

In the sales deal said to be internally codenamed Project Nexus, bidders were offered 99.99 percent shares of Emerging Market Telecommunications Services Limited (EMTS) that trades as 9mobile following hostile takeover attempt of the number four mobile phone company by bank creditors over an estimated $1.2 billion debt.

Teleology Holdings Limited, according to reports by The Cable, a Nigerian online newspaper, was given the nod and is expected to take over 9mobile after staking a winning bid of $500 million over the $300 million offered by Smile Communication Limited, the reserve bidder.

The report also says the other three bidders, Airtel, Helios and Globacom, Nigeria’s second national operator (SNO) refused to submit financial bids in the transaction because they did not have adequate information to evaluate the true worth of 9mobile and be able to take informed decisions on what constitute the true worth of the mobile phone business.

“Our refusal to submit a financial bid was a direct consequence of the gaps we felt were present in the information provided, and limitations on the scope of our interaction with key stakeholders, both of which are critical to formulating an offer price. Given the complexity of the transaction and numerous stakeholders directly impacted by the current situation of the business, we had limited grounding upon which to provide a credible binding offer without this clarity,” an unnamed bidder was reported to have said.

The 9mobile sale process is alleged to being run and managed by lender banks with bidders being denied access to details of contracts with other non-bank creditors, a development that leaves several unanswered questions, information gaps and concerns.

Bankers driving the process were alleged not to have allowed access to other creditors of 9mobile and this has impaired their abilities to evaluate the true state of the company on offer from the network planning, integration and other exit costs.

 The outcome of the bid sale, which gave Teleology the nod to take over the company must have been at the root of the current petition as both Airtel and Helios have led protests expressing concerns over alleged irregularities surrounding the 9mobile sales process by Barclays Africa.

Government got involved with the 9mobile sale because the regulators had last year invoked the too-big-to-fail doctrine to wade in and salvage the mobile phone business from hostile takeover by the creditors banks owed $1.2 billion.

The regulators subsequently appointed an interim board and they appointed Barclays Africa as transaction advisers to sell 9mobile to new investors expected to turn around the fortunes of the mobile phone business.

Umar Danbatta, a professor and Nigeria’s telecoms regulatory chief and his banking industry counterpart, Godwin Emefelie, have since been asked to wade into the 9mobile transaction.

Helios says it wants to lead the 9mobile rebuild drive by reinvigorating a data-led strategy and new investments into 4G services to its Nigerian subscribers the same way it took control of a similarly complex situation in East Africa through the acquisition of a majority stake in Telkom Kenya and can leverage off this experience in the turnaround of 9mobile, the government regulators were told.

On the other hand, Bharti Airtel, which already has an operating mobile business in Nigeria, Airtel Nigeria, is expecting to leverage the acquisition of 9mobile to become the telecoms market leader if it consummates the deal.