Belinda Anderson
M-Cell subsidiary MTN’s R3,681-billion syndicated loan will be used to pay off its initial investment in Nigeria and to give it a kick-start to the initial phases of the project.
M-Cell director Paul Edwards says the ability to raise the funds is a vote of confidence in a difficult period for telecommunications.
MTN plans to launch in Nigeria in early August and the funding gives it a two-year bridge in which to establish itself firmly in the country. It had initially planned to raise about R4-billion by way of syndication, but reduced the amount after its better-than-expected year-end results and also after local shareholders asked for a bigger slice of the pie (37%) than had originally been expected.
The company obtained a short-term loan of R2,8-billion at end January (at the then rate of R7,91/$) to pay for the R2,3-billion for the Nigerian licence and about R500-million in initial working capital.
Now MTN is able to pay its “bridge” funders back and will have about another R820-million left to use on further capitalising the Nigerian operation, as well as for “other opportunities that may come up.”
Financial director Rob Nisbet says MTN estimates that there will be about 10-million cellular users in Nigeria within 10 years, and it plans to have about 30% of those. In the short term, MTN will be one of only two service providers, with Zimbabwe-based Econet planning to launch at a similar time.
The Nigerian government’s telecommunications arm, Nitel, is the third licensee and is still looking for an investment partner. The fourth licensee, Commmunications Investments, failed to come up with its licence fee and so effectively fell out of the race.
Nisbet says MTN expects to have signed on about 30 000 subscribers within the first month.