MTN borrows US$2 billion through Standard Bank

Mergers, Acquisitions and Financial Results

The MTN Group (MTN) and Standard Bank (SBK) have announced a US2 billion loan, which Standard Bank has arranged, for the funding of MTN Nigeria's network infrastructure expansion.

The five-year medium-term debt facility, one of the largest ever telecoms deals on the continent, is to ensure that MTN Nigeria is appropriately capitalised to meet its key strategic objectives of increasing market share and improving coverage and capacity on its network.

The debt raising was originally for US1.2 billion and was split into the Naira equivalent of US840 million in local currency facilities and US360 million of foreign currency facilities. Due to the extensive appetite from the commercial banks, especially the Nigerian banks, the syndication was subscribed by more than 200 per cent. The syndication launched on 2 August and closed on 10 September. The upsized amount of US2 billion is split into the Naira equivalent of US1.6 billion and a US400 million foreign currency facility.

Says Heloise Smith, Director, Telecoms & Media at Standard Bank: "We are particularly pleased to have raised a facility of this magnitude in the prevailing market conditions. The success of the transaction is testimony to MTN's standing as a blue chip borrower and Standard Bank's track record in arranging funding for telecoms operators on the continent."

The MTN Group expects the market size in Nigeria to increase to 52 million subscribers by 2011. Earlier this year MTN Nigeria was awarded a 3G licence and expects to roll out 3G to select areas before the end of 2007.

In December 2006, MTN Nigeria acquired 100% of VGC Communications, a private telecommunications operator (PTO). MTN Nigeria has been rolling out an ultra-modern fibre optic transmission network, one of the largest of its kind in Africa.

Spanning the length and breadth of the country, once completed, this network is expected to ensure a dramatic improvement in the quality of service.

Says MTN Group President and CEO, Mr Phuthuma Nhleko: "We are pleased to have secured this facility which will enable us to provide a quality network, giving MTN Nigeria a competitive advantage and also ensuring that we continue to meet the increasing demand for our services.

"Over the years we have demonstrated our confidence in the Nigerian market through infrastructure investment, spending over R3,6 billion in capital expenditure in 2006.

"Our ongoing investment in Nigeria remains the largest foreign direct investment in the country's telecommunications industry."

Nhleko adds that MTN Nigeria's overriding mission is to be a catalyst for Nigeria's economic growth and development, helping to unleash Nigeria's strong developmental potential not only through the provision of world class communications, but also through innovative and sustainable corporate social responsibility initiatives.

"This deal is another step in the long journey that Standard Bank and MTN have travelled together. We have a relationship spanning more than 13 years and have partnered MTN not only in South Africa but also in many of the African countries in which it has expanded, including Nigeria, Uganda, Rwanda, Cameroon and Zambia," says Smith.

Standard Bank's Head of Investment Banking for Africa, Tim Thackwray, points to the importance of Standard Bank's local presence in winning this mandate.

"The fact that we have just finalised our merger with IBTC Chartered Bank and have now become a significant player in the Nigerian market further strengthens our position."

Standard Bank has been intimately involved in MTN's expansion in Nigeria. It assisted in arranging a US450 million syndicated loan for MTN Group, which was partially used to fund the original licence payment when MTN entered the Nigerian market in 2001.

Standard Bank also arranged MTN Nigeria's Naira bridging finance facility in 2002, as well as co-arranged a US395 million loan in 2003. In 2004, Standard Bank raised a further US200 million for the company and in 2006, assisted with restructuring MTN Nigeria's funding arrangements.

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