M-Cel Issues Bonds in Mozambique

Mergers, Acquisitions and Financial Results

Mozambique's publicly owned mobile phone company M-Cel on Friday launched its second issue of bonds, to a value equivalent to 10 million Us dollars, to finance its ambitious programme of expansion.

The first bond issue, also for 10 million dollars, was three months ago. The difference is that the current bond issue is public, and any citizen can but the bonds. The earlier issue was private aimed at a specific group of creditors.

The bonds have a maturity of five years, with the possibility of early reimbursement after three years. There are 2.5 million bonds, each with a face value of 100 meticais (about four dollars). They carry an interest rate of 18 per cent, plus 3.75 per cent of an index rate, and the interest will be paid every quarter.

According to the M-cel Financial Director, Abubacar Chutumia, speaking at the ceremony to launch the bonds, reimbursement of the capital will start on 23 June 2009. Public subscription for the bonds begins on 22 September, and is scheduled to end on 23 October.

The purpose of the bond issue, said Chutumia, is to raise funds to finance the company's investment plan, which includes expansion, and improving the quality of the network. He added that M-Cel is determined to diversify the origin of the funds it needs to finance its activities.

The chairperson of the M-cel board, Salvador Adriano, told journalists that the company intends to invest 70 million dollars this year in expanding and modernizing its network, and in improving the quality of the existing systems. 20 million dollars of this sum will come from the two bond issues.

"With these two issues we only obtain part of the resources we need to implement our programme for this year", he said. "We are seeking other sources of funding for the remaining 50 million dollars, including our own funds and bank loans".

Adriano said that some of the money raised from the first bond issue went into expanding the network, which was why M-cel was now in 110 of the country's 128 districts. "We are currently using the rest to implement new systems. I can't give details of what we are doing, but I assure you that by the end o the year, the market will have some agreeable surprises from M-cel.

The bonds will be sold through the Mozambique Stock Exchange (BVM). The BVM chairperson, Jussub Nurmamade, said that Mozambican companies now understand what the purpose of a stock exchange is.

"The exchange is pleased when institutions and companies with financial problems come to us to raise money", he said. "That's the role of the BVM, which was set up to help companies finance their programmes". M-cel is a profitable company. It grew by 12 per cent in 2007, when it obtained net profits of 346 million meticais (14.3 million US dollars).

Agencia de Informacao de Mocambique