By Alex Ekemenah, Editor, NextMoney
Will there ever be a new dawn for 9Mobile?
Less than two years of coming into existence, 9Mobile has been caught in corporate identity and integrity crisis. In late December 2018, news broke in the media that 9Mobile has been sold through the backdoor by Asset Management Corporation of Nigeria (AMCON) to a new owner. In early January 2019, news equally broke that a key investor and stakeholder in 9Mobile, Adrian Wood-led Teleology Holdings has pulled its stakes out of 9Mobile.
Is 9Mobile jinxed?
This is a management case study for MBA students and also for financial journalists especially where corporate governance and financial management issues are concerned.
What this Essay is about
This essay is not meant to indict or spite any of the individual actors mentioned by name in this essay. Rather the essay set out to examine the management atmospheres and processes that could not resolve the jinx or problematique (or challenges) faced by the company since the problematique raised its ugly head years back.
Since this essay do not have access to vital management decisions taken at each critical stage of the evolution of the problematique, it rely essentially on hunches, a kind of theoretical pendulum to gain insights into what might possibly have been the essence of the problematique and put a framework around this.
A checkered history
It has been a checkered history for 9Mobile. Its story of woes did not start yesterday. Rather it can be traced to past years. Thus, in order to understand this identity and integrity crisis, we have to move back historically by some steps.
In July 2017, Etisalat, the Nigeria’s fourth GSM telecom service providers metamorphosed into 9Mobile after protracted debt crisis that brought a consortium of thirteen banks coming for the jugular of Etisalat over the failure to service a syndicated loan of $1.2billion.
But with the intervention of Central Bank of Nigeria and the Nigerian Communications Commission, Etisalat was given a new lease of life in the name of 9Mobile in order mainly to prevent a systemic crisis within the telecom sector and job losses for workers and auxiliary workers of Etisalat.
Actually what happened was that Etisalat merely withdrew its 45 per cent stakes from Emerging Markets Telecommunications Services Limited (EMTS) and left with its brand name. 9Mobile became the new identity of the EMTS. Etisalat did not lose its brand name. But since it can no longer operate as a registered corporate entity, it simply left the Nigerian telecom market.
Teleology Holdings, a special purpose vehicle comprising telecom industry veterans led by Adrian Wood, a former Chief Executive Officer of MTN Nigeria, eventually won the final bid for 9Mobile — ahead of Airtel, Globacom, Smile, Helios. The Australian, credited with building a very good business model, has remained in the Nigerian business environment since leaving MTN in November 2004. He seems to know the Nigerian market fairly well – presumably.
Teleology Holdings’ successful bid for 9mobile was reportedly due largely to the quality of its proposed seven-man management team led by Wood himself, and which was approved by the NCC Technical Evaluation Committee, the 13-member bank lending syndicate as well as the acquisition finance provider, Afreximbank.
So what happened in rapid succession that abruptly led to its withdrawal from the juicy looking 9Mobile project?
What might be regarded as tragic is that Teleology acquired 9Mobile, only in November 2018 — about eight months after it made an initial $500million non-refundable deposit to acquire the telco, and 10 months after the takeover was billed to have been finalized.
According to SaharaReporters of January 7, 2019, Teleology Holdings became increasingly uncomfortable with actions taken outside of the agreed business plan by its business partner in Nigeria most important of which is how it was blocked from concluding a management services contract with the local joint venture, Teleology Nigeria Limited. The management services contract which would have enabled Teleology Holdings and its team of experts to oversee the implementation of its elaborate business plans including funding proposals was reported rendered impossible by forces and actors he could not contain.
The witch bird cried yester-night, and the child died this morning. Who does not know that it is the witch that killed the child? This is an African proverb that vividly captures the situation in which Adrian Wood found himself.
The pulling out of Adrian Wood came at the heel of the unfolding controversy of how Keystone Bank and 9Mobile were allegedly sold by AMCON to a new owner that happened to the main business partner of Teleology Holdings. However, this essay is not interested in how AMCON was alleged to have sold Keystone or 9Mobile to this new owner, germane as this may have been to this discourse. This essay is interested in the factors and forces that might have collaborated to force Adrian Wood-led Teleology to withdraw from the 9Mobile project
Given the various media reports on the withdrawal of Adrian Wood-led Teleology Holdings Limited from 9Mobile venture, it is obvious that the sudden exit might not be unconnected with the controversy that unfolded in late December 2018 of how Keystone Bank and 9Mobile were sold to a new owner allegedly close to the Presidency by Ahmed Kuru-led AMCON through the backdoor in what many public commentators have described as a brazen act of illegality and impunity. However, most of the controversial matters still remain in the realm of speculation as no concrete evidences have yet emerged to indict any of the actors being mentioned in the controversy.
There might be two possible theoretical scenarios:
One, he was edged out by the predators (the jackals or the sharks) who allegedly surreptitiously bought over 9Mobile from AMCON, i.e. its business partner in Nigeria, although this can only be stated with extreme caution in order to avoid libel.
Two, he left on his own accord after seeing the handwriting on the wall, due to increasing hostile environmental forces or business climate.
Adrian Wood, whatever the case might be, has burnt his fingers over the gas burner, scarring his hands. His hand can be seen to be heavily bandaged! The Nigerian corporate jackals have dealt with him!
This essay is mainly a management case study of failure of vision and strategy to turn around the fortunes of 9Mobile. In this case study, we are dealing with three different but consecutive Management Boards. The first was the Board led by Hakeem Bello-Osagie under Etisalat, the precursor of 9Mobile. The second was that of Dr Joseph Nnanna-led Board under the gestating period of 9Mobile. The third was that constituted by Adrian Wood after his Teleology Holdings won the bid only last year to manage 9Mobile.
What happened within these Management Boards? Why were they not able to save the unwholesome situation at each critical stage?
It was highly suspected that Hakeem Bello Osagie-led Etisalat Board was a clear case of strategic management failure for which nobody was sanctioned at the end of the day. The Board could not deliver on its mandate. The Board failed to master the telecom market, manage the complex environment and drive a process that could break through the highly complex and competitive market.
According to an online news platform: “There is an opinion that Etisalat’s issue is a déjà vu of what has happened to Econet – a telco that has come to be known as Airtel. Airtel was initially known as Econet in 2001, until Econet lost its management contract and Vodacom took over in 2004. After few months, Vodacom pulled out of Nigeria and her partner, VNetwork took over, changing the brand name to VMobile. In 2006, Celtel bought over Vmobile and gained 65 per cent control of the telco, changing its name to Celtel. In 2008, the entire African operations of Celtel were taken over by Zain Group and the name of the telco changed to Zain. Bharti Airtel acquired Zain in 2010 to the tune of $10.7 billion and now, the telco’s name is Airtel. This fell short of a proper case study for Etisalat Nigeria’s transformation into 9Mobile. The similarity is that change of brand name for both telcos was accidental. The difference is the nature of transformation they went through.”
The Hakeem Bello-Osagie-led Board was quietly dissolved after the bank lenders came calling for their loans, after the intervention of Central Bank of Nigeria and Nigerian Communications Commission. However, the Board was let off the hook of any moral blameworthiness, not to talk of possible criminal culpability or liability. Nobody asked questions on how the Board failed to deliver on its stated mandate. The members can go and reinvent themselves somewhere else. Nobody cares as such! This is Nigeria.
But what of Dr Joseph Nnanna-led 9Mobile Board during the interregnum? This new Board was constituted for 9Mobile by the Central Bank of Nigeria with Dr Nnanna as the chairman of the Board representing the Central Bank of Nigeria. Dr. Nnanna is the Deputy Governor (Financial System Stability), Central Bank of Nigeria. It was arguably an array of some of the best and the brightest in the Nigerian corporate world.
The new Chief Executive Officer of 9Mobile is Mr. Boye Olusanya who previously worked at Econet Wireless (now Airtel Nigeria), led the business strategy initiative for data services. Before parting ways with the operator, he also served as Acting Chief Executive Officer, where he played a deep role in managing the affairs of the company. He was also the former MD at Dancom Technologies Limited where he managed all the telecom assets and the IT Infrastructure. He also oversaw the sale of the 3G subsidiary and managed the roll-out of the fibre backbone network covering 4400km across the country.
Funke Ighodaro was appointed the Executive Director for Finance. Prior to this appointment, Ighodaro was the Chief Financial Officer of Tiger Brands Limited from 2011 to 2016. Before that, she held a similar position at Primedia (Pty) Ltd, served as Managing Director of Kagiso Ventures Limited, a private equity firm, and Executive Director of its parent company, Kagiso Trust Investment Company. She has corporate finance experience with Standard Corporate and Merchant Bank. She trained and qualified as a Chartered Accountant with PricewaterhouseCoopers in London, where she spent 10 years in audit and tax. She is a Fellow of the Institute of Chartered Accountants in England and Wales.
Oluseyi Bickersteth is a Non-executive Director. Bickersteth was a member of the Trade and Investment Committee of the Nigerian-American Chamber of Commerce, a director of the Nigerian-South African Chamber of Commerce. He is presently a Director of the Nigerian Economic Summit Group. As a member of the global board of KPMG, Bickersteth provides advisory services to major companies in varied industries, including oil and gas, financial services, telecommunications, manufacturing, commercial, public sector and not-for-profit organisations.
Ken Igbokwe is also a Non-executive Director. Igbokwe has experience of over 35 years with PriceWaterhouseCoopers, in assurance, taxation, business advisory, and consulting services. Before moving to Price WaterhouseCoopers (PwC) Nigeria in 1988, Ken Igbokwe had a one year stint in London in 1978. He is a member, the Institute of Chartered Accountants of England & Wales, and Nigeria; Member, City and Guilds Institute London; Member, Chartered Institute of Taxation of Nigeria, and Member, Business Recovery & Insolvency Practitioners Association of Nigeria.
Those were the paraded men and women of timber and caliber of the Nigerian corporate world with awesome curriculum vitaes. But as has now become evident, 9Mobile could not take off ground even with the articulated wealth of experience of the individual members of the Board. They could not effect genuine transformation of the company.
So what happened? How did the Board failed to prevent predators from attacking and gobbling up 9Mobile? Is this another case of strategic management failure or the result of proverbial “hostile operating environment”? How did the Board fail to protect the corporate interests of 9Mobile in its fight for survival in a hostile, aggressively competitive and dynamic eco-system? Where now does the alleged rumour of sale of 9Mobile to a new owner leave the Board of 9Mobile? What set of problems did this Board face in the last one-and-half year of its existence leading to the hostile take-over by new owners without resistance? What did the Board do to save 9Mobile from virtual collapse right under its nose?
Finally, Teleology Holdings had on November 12 last year, announced the constitution of a new Board of Directors for 9mobile, following the approval it received to officially take over the operations of 9mobile, coupled with the successful completion of the tenure of the former Board appointed by the Central Bank of Nigeria (CBN) and in fulfillment of the consequential transfer of final ownership to the new investors.
The seven-man Board of Directors included Nasiru Ado Bayero as Chairman; Asega Aliga as Non Executive Director; Adrian Wood as Non Executive Director; Mohammed Edewor as Non Executive Director; Winston Ndubueze Udeh as Non Executive Director; Abdulrahman Ado as Executive Director and Stephane Beuvelet, as Acting Managing Director.
But “strategic management failure” is an omnibus term that conveys probably no meaning as such except when situated within the context and dynamics of the operating environment. The Nigerian telecom market segment has become highly and aggressively competitive in the last few years. A baseline can be drawn. Indeed, in the last four years or so, the dynamics of the telecom sector have drastically changed especially under the current administration. MTN has had a raw taste of government intervention in its affairs whether wrong or right. Thus, MTN finds itself in a presumably new but hostile business environment vitiated by alleged political considerations and motivated interventions.
The same can be said and applied to 9Mobile with its own specific nature of the inherited problems of identity and integrity. In this case too, we need to know what specifically failed: the adopted strategies or the crafted vision. To know this, we need access to the management decisions taken at each critical stage as case study materials to put the decisions under X-ray to see where and at what point things went wrong in the whole chain of events.
Unfortunately, such access is not obtainable as at the time of writing this essay thus limiting the empirical scope of this essay.
But in both cases of Etisalat and 9Mobile, we can extrapolate and see clearly the weak structure of corporate governance, in terms of strategy and vision. There are ostensibly no clear vision backed up by appropriate management drivers, strategies and mechanisms to actualize those visions. This is the basis of the failure as a result of unintended consequences of actions taken that were not properly weighed against the hostile environment.
The ventures are taken as adventures from the bifocals of the individual actors. There is individual and collective failure to establish and upscale professionalism in corporate governance that create new values, promote corporate ethics, innovations and creativities, create new niche and panache and ultimately profitability and wealth.
The Board is meant to be a team and is ever seen to be a team. But empirical cases have shown that the chairman of a Board can become too strong (without appropriate internal checks and balances) and if and where his interests differ or diverge from the rest of the team can become a clog in the wheel of progress of the organization, and can defeat the very purpose of the organization by working at variance with it. It is often a case of the individual (the chairman or managing director in this case) becoming stronger than the institution (the organization). Due process is circumvented by being abused or violated – whatever adjective one might prefer to use. The net result is failure.
From Etisalat to 9Mobile, it was a dream shattered, vision busted for both corporate entity and the individual actor, destruction of human talent hitherto praised to the high heavens.
Sweet and Sour
It was a sweet and sour story from the era of Hakeem Bello-Osagie-led Etisalat to 9Mobile. As one online news platform put it: “It began with zipped green lips that gradually became unzipped, and was unveiled to us as the Naija Network.
“Etisalat, from day one, looked like it was going to be different from the existing mobile telecommunications networks that were in existence in the country.
“There was a targeted appeal to the youth, a specific focus on being Nigerian – despite floating in from the Middle East – and a quick move to establish itself as a cultural network, not just a business.
“Banky W’s song for the network was arguably among the best the artiste has made in his career. Etisalat started that well.”
Then begin the headwinds from Hell.
Etisalat went on borrowing binge, to restructure, stabilize and reposition its operation in Nigeria. That was indeed a noble strategic goal or objective.
So where did it get it wrong? Etisalat went to take loans from a consortium of 13 banks which it could not at the end of the day, could not service. According to this same online news platform: “Only the banks and the C-suite men on the board will be able to tell the true story, but Etisalat apparently found out that the business environment in Nigeria goes beyond identifying as green and for the youth.
“With 21 million customers, Etisalat was competing well in the fierce industry of telecommunications in Nigeria, but it was also quietly suffocating. According to reports the debts owed by Etisalat to the different banks are: $262 million and N80 billion to Zenith Bank, $138 million and N42 billion to GTBank, and Access Bank follows with $131 million and N40 billion. Seven other banks were owed, bringing the total to approximately N541bn.
“It was a monumental load that ultimately weighed the company down, leading to the Etisalat group from withdrawing its 45% stake from Emerging Markets Telecommunications Services Ltd (EMTS).
“But EMTS are not closing down the business. They want to keep on the fight.”
Then the bubbles burst. The banks, like a bunch of Shylocks, or vultures, went after Etisalat’s jugular, threatening to throttle it if it cannot pay back the humongous loans. But it was an irony that when the banks, like vultures, came calling at the headquarters of Etisalat, they came after one of their own: Hakeem Bello-Osagie who had been a former Managing Director of United Bank of Africa, one of the five top-notch banks in the country. They swarmed over Etisalat, threatening it with receivership.
Of course, the bankers are not a nice fellow: don’t cross their paths if you like yourself! The consortium succeeded in having Bello-Osagie-led Board dissolved and shoved out of the Boardroom of Etisalat.
First of all, nobody asked the questions of how Etisalat at that time failed to repay those bank loans; of how the loans were actually deployed; of how Hakeem Bello-Osagie-led Board of Etisalat mismanaged the situation; and finally of how the Board was let off the hook of any form of punishment/sanction for its ignoble failure to salvage Etisalat.
Secondly, nobody also asked questions of how Etisalat’s humongous debts became toxic; of how the debts were taken over by AMCON. Of course, when AMCON takes over your debts, you most probably don’t ask any question essentially because AMCON is usually the last resort in a whole chain of unsavoury events culminating in debts’ buy-over. AMCON is a shit-carrier or an undertaker. It is like those LAWMA waste-collection Lorries on the streets of Lagos. AMCON is a waste disposal agency legally established by the Federal Government under Jonathan Administration to dispose off toxic debts accumulated by the jackals of the private and public companies.
Of course, AMCON is a fearsome agency. When it comes knocking on the door, everybody panic and start to run helter-skelter, comparative to EFCC or those other security agencies. AMCON is a debt-collector, and a bad debt-collector for that matter (!), and as has been shown empirically, nobody wants to pay debts. If you are arrogant and bullish over your obligations, AMCON is ready to clip your wings. AMCON has revealed severally through its media parleys and press releases that only a handful of the entire corporate obligors in Nigeria owes about 80 per cent of the obligations running into trillions of Naira. The situation is as bad as that. That is the characterization of the rascality of the Nigerian corporate world.
But the situation was not helped with the alleged sale of 9Mobile to a new owner by AMCON. It is like moving from fry pan into a burning furnace! According to THISDAY of January 8, 2019: “The development may further compound the woes of the struggling 9mobile operation. In a pre-disconnection notice advertised by the Nigerian Communications Commission in the media on December 18, IHS, the infrastructure services provider, which hosts majority of 9mobile’s base stations, was granted permission to disconnect 9mobile and other debtor telecom operators within a 10-day ultimatum, ostensibly on account of 9mobile’s indebtedness.
“THISDAY gathered that should this disconnection take place, subscribers on 9mobile’s network would have been effectively shut out completely from the telecommunications network and would be unable to make or receive calls.
“The 9mobile operation is in dire straits and apart from customer attrition, is battling with huge indebtedness to dozens of suppliers. It would be a tragedy if the acquisition by Teleology goes wrong,” said a staffer of the company.
The Environmental Factor
“Harsh operating environment” or “hostile business environment” are another set of jumbo adjectival terminologies that need to be explicated for appropriate strategies to be adopted to master such an environment. The necessary questions are what make this environment “harsh” or “hostile” and what can be done to make it friendly and attractive for business operations to achieve the strategic goals of the company.
It is presumed that part of the jumbo loan of $1.2 billion obtained by Etisalat from a consortium of 13 banks will be used to make the environment friendly for its operation henceforth. But if this goal was not achieved, then it can also be justified to ask why this did not happen. It will then be presumed that something fundamental was amiss somewhere.
To unravel this mystery, we need to see the particular or specific business model adopted by the Board to confront the harsh operating environment. None could be seen, at least from media report of the crisis confronted by Etisalat then and now 9Mobile.
This essay, however, does not suggest that there not have been such a business model. Rather, it is not in the public domain where it can be accessed to form part of the material reference for this case study. This essay could not also find reference to a time when the Boards engage in what is often called “management retreat” for brainstorming session in which ideas could be generated for solving the problems facing the company. “Board meetings” no doubt took place but which may be or not involve such “brainstorming session” depending on the circumstances in which the Board meetings are held.
Thus it is safe to conclude that while several Board meetings might have been held, such meetings did not lead to the taming of the hydra-headed monster of problems confronted by the company.
Apart from short-term thinking (bankruptcy of long-range ideas and vision), destructive decision making and poor public image and perception management already hinted above, there is also the hostile ecosystem in which 9Mobile unfortunately finds itself at this point in time. 9Mobile could not adjust to the new telecom market reality of Nigeria of today.
What is this reality?
One, there is no doubt anymore that the Nigerian telecom market space has become aggressively competitive. Nigeria has become one of the largest telecom markets in the world with nearly 100 million subscribers’ base. Of course, there are mainly three other major players in this market: MTN (which has its own set of woes), Globacom and Airtel. How are the other three able to remain in the market while 9Mobile is dying off? What lessons can one learn from the survival strategies and tactics of this other three telecom service providers – without falling into the trap of industrial espionage?
Two, there is a new regime in town that is also aggressive in intervention in the internal affairs of the telecom market at the slightest provocation. MTN has had bitter taste of this government intervention. The political atmosphere has become charged since the new administration came to town in May 2015. There are business buccaneers parading the streets of Lagos and Abuja looking for preys to devour. This is their time. And they are making maximal use of the opportunities because nobody knows tomorrow as another regime can come and sweep them out of the streets.
Three, the organized private sector has also noticeably changed in the last few years. There is a new wave of intellectualism in town addressing corporate governance issues. The banking sector provides such veritable examples of new governance ethos.
There is no evidence of a proactive Board in the ontology of 9Mobile as a major driver of innovative ideas and processes by which it can be salvaged from its doldrums.
According to Nathan Furr and Jeffrey Dyer, writing in Harvard Business Review of December 2014, in their interesting article titled “Leading Your Team into the Unknown”: “Innovation is at heart a process of discovery, and so the role of the person leading it is to set other people down a path, not to short-circuit it by jumping to a conclusion right at the start. To lead innovation, you don’t have to be the next Steve Jobs, nor do you need to guess the future. Rather, you must carve out the mental space within which the innovation process can be carried out.
“How? First, by setting the expectation that innovation will push boundaries. Fashion designers often include very bold designs in their lines to inspire customers to try more-flamboyant styles. In a similar way, Amazon pursues its flying drones, and Google’s X lab its driverless cars and high-altitude Wi-Fi, in part to make their entire organizations bolder and more innovative.
“You need not go far. You can push boundaries just as dramatically by demonstrating a willingness to reimagine some of your organization’s most fundamental assumptions about products, customers, and business models” (p. 82)
9Mobile seems to have missed the road and has tragically gone into the wilderness. It has become beleaguered, almost falling over the cliff edge. Would it ever reach the Promised Land?
There is no more doubt that 9Mobile is embroiled in an identity and integrity crisis, moving from one owner to the other. There is no stable Board to pilot the affairs of the telecom company to a safe haven where it can begin to make profit and create value addition for customers including its staff. Staff morale has plummeted down the slope of hopelessness. No one is proud to announce himself or herself as a staff of 9Mobile as the public sniggers at them.
9Mobile has been at the receiving end of considerable customer attrition since its financial troubles became public in 2017. From more than 22 million customers in its heyday in October 2016, for instance, the network had just a little over 15 million active subscribers in November 2018, according to NCC data, and has consistently lost customers with each passing month. “Saving the company from a foreclosure together with its implications on job loss and possibly the stability of the larger telecom industry necessitated the intervention of the duo of the CBN and the NCC in what was supposed to be a guided liquidation of the company, but which now increasingly appears to be an imbroglio,” a 9Mobile employee lamented to a media outfit.
Teleology Holdings has been edged out, leaving behind a blaze of confusion. There have been allegations and counter-allegations of disloyalty, arms twisting, coercion, intimidation and false accusations. Trust the Nigerian business jackals and sharks: they can do anything to smear your relative good image beyond repair. If you are a foreigner, just pack your baggage and take the next flight back to your country where you come from or go to a new business destination.
The new corporate owner of 9Mobile can be speculated upon at this time even when it is claimed to be owned by Teleology Nigeria Limited. There is need to lift the corporate veil on the members of the new Board of Directors and Management Board of 9Mobile. This will hopefully save it from the fumes of confusion that has come to currently becloud it. 9Mobile should not be allowed to die in such a humiliating manner after years of suffering public aspersion and negative perceptions.