A group of Nigerian banks has agreed an extension to a $1.2 billion loan made to 9mobile (formerly known as Etisalat Nigeria) pending the mobile operator finding new investors, First City Monument Bank said on Tuesday.

Nigerian regulators stepped in last month to save Etisalat Nigeria from collapse and prevent lenders placing the country's fourth biggest telecoms group into receivership, prompting a board, management and name change.

Etisalat Nigeria took out a $1.2 billion loan four years ago from 13 local banks to refinance existing debt and expand its mobile network, but it struggled to repay due a currency crisis and a recession in Nigeria.

FCMB, which is owed N4.5 billion by the telecoms group, said lenders had put a hold on taking provisions on the debt and that they were working with the regulators.

“In terms of provisioning, there is hold on that. What we have agreed is an extension and we have agreed to extend pending the sale to new investors,” the bank told an analyst, after it published half-year results.

The banks, many of which are reporting first-half results, have been trying to work out the value of 9mobile before deciding whether to impair the loan or wait until the company finds new investors.

Banks involved in the loan deal include: Zenith Bank , Guaranty Trust Bank, First Bank, United Bank for Africa , Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

GTBank with $138 million in outstanding loans to 9mobile and Access Bank with $131 million are among the most exposed.

9mobile Chief Cxecutive, Boye Olusanya told Reuters he was focused on getting the telecoms group back on track to make a profit, while working on the paperwork to eventually raise new capital. He has also asked the telecoms regulator for concessions on spectrum and foreign exchange access to help to shore up revenues.

The telecoms group has asked Citigroup and Standard Bank to find an investor to buy into the firm and three companies have shown interest, a banking source close to the deal said. (Reuters)

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