There is an ongoing conversation on who opened the doors for Econet to start playing in the Nigerian market inspired by Bola Ahmed Tinubu who was speaking at the just concluded screening of presidential aspirants of the All Progressive Congress (APC).
The former governor of Lagos claimed that he had to play a role in building the telecoms industry in Nigeria by bringing Econet Wireless (now Airtel) to Nigeria. Speaking on his achievements in the telecoms industry, Bola Tinubu said:
“There are three highways in the development of a nation. If you have gas or supplying diesel, electricity transmission is also a highway and communication. I could remember that I brought Eron to this nation. Telecommunication is now a success today in Nigeria. I brought Econet. I helped them. They now want to adopt 5G. We started it.”
“Nigeria is rich. The essence of our livelihood must be placed on short-term and medium-term values. They must produce values for us”, he concludes.
First, the story of Econet
Econet launched its network on July 10, 1998, and was listed on September 17, 1998.
Econet was founded by Strive Masiyiwa. The telecommunications company started operations in 1998 with mobile phone companies in Botswana and Zimbabwe.
Masiyiwa saw the potential for wireless telephones in Sub-Saharan Africa. He observed that wireless telephones would provide more access, can be cheaper and can serve more people, considering that the region had only two fixed-line telephones for every 100 people at that time.
Masiyiwa sold Retrofit Engineering in 1994 and started to finance Econet Wireless through his family company, TS Masiyiwa Holdings (TSMH). He met with fierce opposition, and eventually, Econet’s first cell phone subscriber was connected to the new network in 1998.
Two years later, Masiyiwa relocated his family and the Econet headquarters to South Africa in 2000. Wikipedia says it was an exile and this time, he was not going to return. Masiyiwa himself said simply that South Africa was the best place from which to launch a multinational corporation because it had the continent’s most vibrant economy.
Today, the company operates in 23 African markets. These include Burundi, Botswana, Democratic Republic of Congo, Egypt, Ethiopia, Ghana, Kenya, Lesotho, Liberia, Malawi, Mauritius, Namibia, Nigeria, Rwanda, Sierra Leone, South Africa, South Sudan, Sudan, Swaziland, The Gambia, Tanzania, Uganda, Zambia, Zimbabwe.
It presently owns two strategic business units which cover mobile telephony (Econet Wireless), digital technology and platforms (Cassava Technologies) and corporate social enterprises (Delta Philanthropies and Higherlife Foundation).
A background story…
Econet Wireless Nigeria – In 2001, besides MTN Nigeria and MTEL, Econet Nigeria was one of the three companies that won the GSM license auction. Mike Adenuga’s Communication Investments Limited (CIL) was in the mix, but the licence earlier awarded to CIL was withdrawn by the government over alleged late payments.
The 2001 GSM Auctions attracted a record $855 million into government coffers under which the licences were sold to the winning bidders and a slot pre-allocated to the public-owned pioneer National Operator, the Nigerian Telecommunications Limited (NITEL), at the time.
The five bidders were:
- Communication Investments, a group whose backers are reported to include Deutsche Telekom, Deutsche Bank and Dresdner Bank
- South African-backed Econet Wireless Nigeria
- MSI-Celtel Nigeria, a group reported being backed by two former heads of state and also including US-based Monarch Communications and several private equity firms
- South African-backed MTN Nigeria Communications and,
- United Networks Mobile, comprising Orascom and United Bank for Nigeria.
The license was announced to be valid for 15 years.
The statement announcing the winners of the bid was signed by the then Executive Vice‐Chairman, Nigerian Communications Commission (NCC), Engr. Ernest C A Ndukwe.
Afterwards, Econet Wireless Nigeria said it was launching the telecoms-starved country’s first GSM network three days before the deadline for the start of services by the three licensed operators. It was going to launch on August 8, 2001, going head to head with rival operator MTN, whose services started the same day.
“This is not just about putting together a network, this is about building a nation,” Econet Nigeria’s chief executive officer Zachary Wazara told a news conference.
And, in September 2001, Econet Wireless became the first GSM operator to launch its services in Uyo, Akwa Ibom. Uyo was the fourth Nigerian city to get on the Econet Wireless network after, Lagos, Abuja, and Port Harcourt.
How Econet’s 2001 bid was funded
In a blog post, fourteen years after launch, CEO and Founder of Econet Wireless, Strive Masiyiwa, said:
“To participate in the bid, you not only had to raise money, but there had to be a member of the bidding consortium who was an experienced GSM operator. Econet Wireless met the requirements because of its experience in Zimbabwe and Botswana. Our Nigerian partners, which included state governments, local banks and high net worth individuals, were financial investors. The largest shareholder had only 10%. That was the written agreement.”
“I managed to assemble a consortium of 22 investors to put up the money needed to bid. Our shareholders were all Nigerian, mostly institutional investors including leading banks and two state governments, Lagos and Delta. The license cost us $285 million and was the most expensive license ever issued in Africa at the time. This was 2001.
According to Strive’s testimony, some state governments were early investors. He specifically mentioned two states: Lagos and Delta state.
And none was actually a dominant shareholder. “Most of our investors had between 1-10% shareholding. Econet Wireless Nigeria had only 5% of the shares, but that was fine because it was 5% ownership of a very big pie”, he said.
But the support even had a steep price. Then came the fateful day when he was told that his company must pay a total of $9 million in bribes to senior politicians (in state government) who had facilitated the raising of the money to pay for the license in the first place.
Still, in his blog post, Masiyiwa wrote:
“James Ibori, the Governor of Delta, was demanding $4,5 million be paid to him in his personal capacity. He was one of the most powerful men in the country and had a reputation for violence. When he heard that I was refusing to approve payment he issued an ultimatum: Pay or I will chase you and your people out of the country… I refused to authorise the illegal payments. The money would not be paid as long as Econet was the operator and I had signing authority.”
Eventually, Econet’s contract was revoked, and Masiyiwa had to withdraw all his staff and their families (200 people in all) and they left Nigeria. Most of our people had to be retrenched. The loss of the contract almost drove us to bankruptcy as a group.”
This was in 2003.
Did Bola Tinubu play a role? What we know
Bola Tinubu was the governor of Lagos when the auction by the federal government was conducted through the NCC. Remember that Masiyiwa mentions Lagos as one of the two states that financially supported the license fee.
Then, you will realise that the former governor of Lagos and APC presidential aspirant must have truly played a part in that process. While that may qualify as helping them, it will not qualify as “I brought Econet”. The decision to come to Nigeria, according to the founder, was his.
Also, the evidence shows that Lagos might have been a significant shareholder in the enterprise, but it wasn’t the largest holder. That may be because it wasn’t on the table at the onset, it was invited.
The former governor disclosed that the Lagos government’s investment in Econet Wireless Nigeria Limited (now Airtel) was a straightforward institutional investment, which earned the state a profit of more than ₦15 billion from an investment of ₦4 billion.
The exchange rate on January 31, 2001, was 133.4 naira to one dollar, so, it means Lagos paid approximately $29,985,007 out of the $285 million, which amounts to approximately 9.5% of the shares.
The Victor Asemota angle
Popular tech Twitter influencer, Victor Asemota has also moved to debunk Tinubu’s claim. According to him, Lagos State was only involved in its founding through the acquisition of secondary shares “after much deliberations”.
Asemota claimed that the then Lagos governor did not commit to Cybertel (Econet’s founding trading name in Nigeria) until after Delta State, Oceanic and the Akwa Ibom state government had gotten involved:
“My uncle held a party for Tony Anenih Jr. after his wedding in 2000 in Benin City. Many of the new state governors were in town and came for the party. He got five of them into his bedroom and pitched a company called ‘CyberTel’, which was supposed to bid for a GSM license. Only Delta State was very keen on it. The others told us that they would get back. Cybertel merged into the consortium called First Independent Networks Limited, which was started by Bolaji Balogun and his team at City Securities Limited.”
Asemota also indicated that as part of the investment agreement, Econet was required to provide 40% of the license cost as well as provide the technical know-how.
“The initial structure we had proposed was for the licensed entity, Econet Wireless Nigeria (EWN) owned by FINL and the technical partner to own 60% of the operating entity Econet Wireless Mobile (EWM) and the remaining 40% coming into that entity from states like Delta and AKSG.”
And, according to him, That 40% never came. It was at this point that the Lagos state government bought in. The state government was allowed in to buy secondaries from existing shareholders who had covered the initial $285m license fee.
In fact, Asemota said that the oil and gas company, OANDO was also a shareholder at that time. And, the relationship between the CEO, Wale Tinubu and the governor got the Lagos government on board.
“That was the extent of the Lagos State involvement in the deal. His relative was the state governor, and it made it easier for OANDO to convince them. Tinubu didn’t even commit to Cybertel initially. Delta State and Oceanic saved ECONET. David Edevbie saved us all,”he concluded
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