The fate of Etisalat's operations in Nigeria will be decided this week after it defaulted on a US$1.2 billion loan repayment.

Etisalat Nigeria has been unable to repay the loan it was given in 2013 in order to finance its service upgrade and expansion plans.

It now owes several banks including Guaranty Trust Bank, Zenith Bank, First Bank, United Bank for Africa, Fidelity Bank, Access Bank, EcoBank, First City Monument Bank, Stanbic IBTC Bank, and Union Bank.

It took the intervention of the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) to prevent a consortium of Nigerian banks from taking over the telco.

"Yes we are indebted, but we have commenced payment, and we only stopped the flow of repayment (a) few months ago as a result of devaluation of the naira and scarcity of dollar," said Ibrahim Dikko, Vice President, Regulatory Affairs at Etisalat.

According to Dikko, the agreement with the banks was that Etisalat would pay a percentage of the loan with interest on a quarterly basis.

"We were meeting up with that obligation until recently when the naira was devalued, coupled with dollar scarcity and economic recession," Dikko said.

Tony Ojobo, NCC's Director of Public Affairs, said the Commission decided to intervene because of the negative impact the company's takeover would have on Nigeria's telecoms industry.

"The NCC was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this might send to potential investors in the telecom industry," Ojobo said.

NCC and Etisalat have confirmed that renegotiations are in place with the banks.

"We have commenced fresh discussion with the banks to negotiate a new mode of refinancing the loan. The situation is not affecting our service delivery and we will continue to provide quality services to our customers," Dikko added.

However, there are strong indications that the Etisalat Nigeria's parent company, Abu Dhabi-listed Etisalat, is considering leaving the Nigerian market.

According to a Reuters report,  Etislat would kick-start the sale of its stake in Nigeria as soon as it is able to restructure the debt.

The company has however refused to comment on the report.