9mobile’s troubles may not be over yet, as Adrian Wood and Teleology Holdings move to withdraw from the takeover deal. But the situation isn’t as serious as it looks.
It has been tough times since Etisalat’s financial troubles blew up in 2017, leading to the withdrawal of Etisalat International and the re-branding to 9mobile. Since then, Nigeria’s 4th mobile operator has lost over 5 million subscribers till date.
In a long drawn out slug-fest that pit a number of contenders, including finalists Airtel, Globacom, Helios, Smile, and Teleology against one another, it was the consortium of local and foreign investors known as Teleology Nigeria Ltd that won the final bid. Teleology Holdings is a company promoted by pioneer MTN Nigeria CEO, Adrian wood. It has a minority stake in Teleology Nigeria Ltd, the winner of the 9mobile bid.
It was in August 2018 that Teleology finally got regulatory approval to take over the operations of embattled Nigerian mobile network operator, 9mobile. The approval by the Nigerian Communications Commission (NCC) was reported as having been granted on the 29th of August.
In November of the same year, the takeover was concluded and a new Board of Directors was constituted. The new board had the following individuals on it:
- Nasiru Ado Bayero – Chairman
- Stephane Beuvelet – Acting Managing Director
- Abdulrahman Ado – Executive Director
- Asega Aliga – Non-Executive Director
- Adrian Wood – Non-Executive Director
- Mohammed Edewor – Non-Executive Director
- Winston Ndubueze Udeh – Non-Executive Director
There was much to celebrate. The takeover process had dragged on for too long – far beyond the initially announced date of conclusion. Now, 9 mobile could move forward. Would it re-brand or would it continue to operate under the same brand name?
Nigerians and the rest of the world waited in anticipation.
But then, the plot took a new turn: in January 2019, Teleology Holdings, the company that had courted and fought tooth and nail to get the bride, was reported to be backing out of the deal.
In a move that took the public by storm, Wood resigned from the boards of both 9mobile and Teleology Nigeria Ltd.
Why The PullOut By Teleology Holdings?
It is a bit of a complicated mess, but let me attempt to paint the picture as accurately as possible.
Insiders say that Adrian Wood and Teleology Holdings are backing out because the company has been blocked from concluding a management services contract with the local joint venture, Teleology Nigeria Limited since the formal take-over of 9mobile in November 2018. The management services contract was for Teleology to oversee the execution of the turnaround/restructuring.
A statement by Adrian Wood on the matter, published by ThisDay, reads:
Fifteen Teleology experts have worked since June 2017 on detailed 9mobile turnaround planning, development strategies and financial restructuring. This included lining up more than $500 million fresh direct foreign investment from international institutions.
9mobile is an exciting opportunity to build a revolutionary mobile network that could be the pride of Nigeria, unfortunately, it appears that we will not be able to participate.
“We now must stand down from further work on the 9mobile project.
As much as I know, such a management contract from which Teleology has been allegedly blocked is critical to a foreign company’s ability to be involved in the operations of a local operator it is investing in.
Here is a rough idea of how the chain of influence works: Foreign investor (Teleology Holdings) – local joint venture (Teleology Nigeria Ltd) – local operator (9mobile).
Without a management services contract between the foreign investor and the local joint venture, the former might as well be a dumb figurine on the shelf in the operations of the telco. My understanding is that this means they invest but are not able to execute or even oversee any of the plans they drew up.
It is on this premise that Adrian has resigned from the boards of both 9mobile and Teleology Nigeria Ltd and pulled Teleology Holdings out of the deal.
Teleology Holdings Are Jokers, say 9mobile
9mobile has published a statement on the matter, and they say unequivocally that Telelogy Holdings have not been serious so far, having failed to meet up to their own end of the bargain. 9mobile also says that Adrian Woods’ game plan is “short-term financial gain”, which goes against the telco’s approach.
Excerpts from the statement signed by 9Mobile’s Director, Regulatory and Corporate Affairs, Oluseyi Osunsedo:
”While every partner in the consortium was delivering and meeting their obligations to the partnership in terms of financial resources, physical availability for crucial meetings and extensive network to help build the business, Mr. Adrian Wood’s Teleology Holdings Limited, which only owned a minority stake in Teleology Nigeria Limited, failed severally and wholly to meet theirs. Mr. Wood was not personally present for all the critical presentations made by the consortium during the bid process and failed abjectly with his financing arrangements with Swiss-based UBS Bank. In all these failings, other partners in the consortium filled the gap and pushed ahead until the sale was completed.
“Since taking over the company, and without any assistance from Mr. Wood or Telelogy Holdings, the Board has revived and enhanced relationships with key vendors and core business accounts; improved business relationships with suppliers; enhanced its core network capabilities to deliver network efficiency competitively with other operators. With the assistance of leading global consultants, the company is also undertaking a complete review of its operational, regulatory, financial and technical architecture. On these bases, 9mobile has emerged from a period of uncertainty over the past two years to attain an active subscriber base of 16 million, representing a net increase of over 1 million subscribers in the last 6 weeks alone”.
So far, the NCC has said nothing detailed either except for assurances that they are taking steps to resolve the issue in the interest of subscribers and the telecom industry.
It gets interesting; right? As with most conflicts, there are always different sides to the story.
Implications For 9mobile, Teleology Holdings, and Everyone Else
Errr…how do I say this? The situation does not look as bad as it originally appeared to be. I don’t have figures for Teleology Holdings’ stake in Teleology Nigeria Ltd, but if it is indeed a minority stake, and if there are other international investors with both financial might, business acumen, and technical expertise to make things happen, 9mobile is not exactly in trouble should Adrian Wood pull out.
At the best, a replacement will be found to fill the small vacuum left by the exit of Adrian and Teleology. At the worst, 9mobile can be bogged down with years of legal wranglings if Adrian Wood’s team believes they have a case and choose to fight.
This absurd situation does not sound like a disaster for 9mobile. Or am I missing something? Let’s have your comments!