17 Nigerian banks in $3bn loan syndication for MTN
The facility, arranged by the firm itself, had Guaranty Trust Bank as co-ordinating bank for the local lenders. The facility is meant to strengthen its capital base and re-align its operational and marketing strategies to meet the growing demands of its teeming subscribers, Goschen says.
The local banks are – GTBank, FirstBank, Zenith Bank, UBA, Access, Keystone, and FCMB. Others include Standard Chartered, Citibank, Diamond, Ecobank, FSDH, Rand Merchant Bank, Nigeria, Mainstreet, Union, and Fidelity.
The foreign banks are – KFW Bankengruppe (Europe), RMB – SA, EDC of Canada, Nedbank, ICBC, China Development Bank, and China Construction Bank.
Andrew Bing, chief financial officer of the company, says 70 percent of the total loan amount is in local currency - the naira, while the remaining 30 percent is denominated in the US dollar, saying though borrowing in local currency is more costly, but the company had to hedge against risk and volatility, as “we needed to manage our currency risk profile.”
The mobile network company also discloses at the loan-signing ceremony that it had reached the 50 million subscriber mark, controlling over 42 percent of Nigeria’s vibrant telecoms market, noting it will deploy the proceeds to various network expansion initiatives across Nigeria.
But industry analysts tell BusinessDay that the telecoms firm is also bracing up for the heightened competition the commencement of number portability scheme will pose.
With the launch of the scheme, Nigeria’s 114 million mobile phone lines can now retain their phone numbers when changing from one network to another. “The power and freedom of choice now rests with the subscriber. If a customer is dissatisfied with the service quality on a particular network, he or she can port to another network,” Eugene Juwah, executive vice chairman, Nigerian Communications Commission (NCC), said on Monday, at the launch of the service.
Mobile networks in the country will all be gunning for more market share as they jostle to either lure new subscribers onto their respective networks or retain existing subscribers. As at the third quarter of 2012, according to Renaissance Capital, South Africa’s MTN still dominated the telecoms market with 42.5 percent market share.
India’s Airtel and Globacom have 19.7 percent and 20.7 percent market share, respectively, while UAE’s Etisalat has a 13.4 percent market share.
Market analysts envisage that there would either be an upward or downward movement in market share of mobile network operators. This is even as telecoms subscriber earnestly search for better quality of service, reduced phone tariffs and innovative products and services.
But industry analysts say that MTN, as the market leader, fully understands the implication of the mobile number portability. The telecoms company will however be looking at channelling significant portions of the medium-term loan facility toward innovative product development, improved customer contact centres, mobile data and broadband infrastructure deployment - all in an attempt to cement its position as the dominant player in the telecoms market.
Speaking at the formal signing of the loan agreements in Lagos on Tuesday, Goshen, the CEO, describes the development as “another successful landmark in the history of MTN and the Nigerian financial services industry in collaboration with international banks.”
This record-breaking deal, according to him, follows the raising of a $2 billion facility in 2010 from 15 local banks and two international lenders, which was adjudged as the largest corporate financing deal in the whole of sub-Saharan Africa. At the time, it was the largest facility granted to a single country operator in Africa.
MTN Nigeria also won the award for its maiden financing in 2003. “The restructured and additional facilities will enable us to continue with the aggressive investment in our network... over $1.5 billion in 2013 alone, to take advantage of the demands of our customers and the growth opportunity,” he says. The naira tranche of the facilities has a tenor that has been revised from five to seven-year repayment profile.
“The debt mix is substantially driven by the local market. The total debt profile is $3.3 billion. The funding will be used for general purposes and capital expenditure on network expansion. The funding is insecure because the lenders have strong confidence in MTN,” Andre Bing, chief financial officer, MTN, says.
Businessday
