4 Things Startups Can Learn From The Takeover of Etisalat (9Mobile)

Etisalat came into Nigeria, saw and everyone is now wondering if it is going to conquer. The crises of Nigeria’s 4th largest mobile telco started when it deferred on its N541.8 billion loan from a consortium of banks. Even its investor from Abu Dhabi divested from the telco and gave it 3 weeks to stop using the Etisalat brand name. As a result, the executives led by Hakeem Bello-Osagie resigned and a new management was appointed for the telco. There are so many things startups can learn from the travails of Etisalat and we share some of them.

Slow and steady growth is better

The ambition of any startup is to grow to a level of an internationally recognised business. However, before your startup gets to that level, it has to pass through the teething and development stage. It does not really count if you have million of dollars in your account, you still have to go through this phases. When Etisalat arrived Nigeria, it came with a bang. It wanted to be number two if not number 1. Their marketing wheels rode faster and quicker that many subscribers had no choice than to purchase their sim card. Perhaps, this is part of the result of its aggressive entry into the telco space despite the fact that you already have MTN, Airtel, and Glo on ground. Hence it is better to be slow and steady so that you can build an impregnable foundation.

Build a strong management team

There is nothing like a strong management team that will manage and run your business. Etisalat had a strong management team led by Hakeem Bello-Osagie. However, we do not know what went wrong on the way that they were not able to fulfill their agreement to their lenders. Of course, the economic downturn affected their ability to repay. Still, a strong management would have quickly taken action before it got to this level. Even the banks rejected their appeal to restructure the loan. This was a clear sign that the management team had lost the confidence of these financial institutions. Now the Bello-Osagie team has left and Etisalat is in a limbo.

Ask for help before it is too late

A major problem with Nigerian companies is that they like to cover up crises. Rather than addressing the problem they deny it and say everything is fine. We have heard long before these that Etisalat is in troubled waters but the management kept assuring Nigerians all is well. But, obviously, it was not. If they had admitted and asked for help, the Nigerian government may have stepped in earlier enough to rescue. You cannot say that the Central Bank of Nigeria cannot order the banks to tarry a while before they take over Etisalat. However, it was very late before they admitted that something was indeed wrong.

Accept investors and Venture Capitalists who will stand by you

Nigerian startups have raised thousands of dollars from investors and Venture Capitalists. This is good news. But these investors are looking to make money and you have no choice than to do their bidding. Also, know that when you stop profiting, they will pull out their investment and move on. You do not want all these types of weather investors. The parent body of Etisalat owns 45 percent holding in Etisalat Nigeria. Imagine the effect of pulling 45% stake in a company. Except action is taken immediately and the stake is sold, we may hear the news that everyone has been avoiding.