MTN Nigeria, in a major push for data revenues signed a N200 billion seven- year Medium term loan agreement with a consortium of local banks, with FBN Quest acting as a facility agent.
The largest operating telecommunications company in Nigeria, declared that the loan raised from 12 Nigerian banks will be used for expansion and improvement of data services where it sees a major part of its revenue growth coming from in the future.
Speaking at the signing, Chief Executive Officer, MTN Nigeria, Ferdi Moolman, expressed enthusiasm at the completion of the agreement, saying it signposts MTN’s commitment to and confidence in Nigeria, and the strength of the strategic collaboration between MTN Nigeria and local financial institutions, that will help deepen and broaden the provision of ICT services in Nigeria.
“The signing of this loan facility is a major landmark in our expansion programme in which we are making significant investments. The facility will enable us evolve the network to deliver convergent and superior quality, drive voice capacity expansion and data service penetration, maintain optimal capital structure and funding level that support growth and expansion,” Moolman said.
“Making it possible for people to connect to each other and the world, find and share information and ideas, create and access new digital services and reimagine old services. This partnership puts in place infrastructure that empowers commerce, industry and the provision of public services,” Moolman said.
MTN’s debt increased to 69.8 billion rand as of the end of June, compared with 57.1 billion rand six months earlier.
Kunle Awobodu, MTN Nigeria’s Chief Financial Officer, told BusinessDay that; “although MTN has the most expansive fibre network in the country, there is an issue with fibre cuts and attack. Therefore, we need to protect our network in a way that even when we get attacks, our network doesn’t go down. We are going to invest in ring-fencing our coverage all over Nigeria and also invest in fibre infrastructure so that high speed data can reach the rural parts of the country.”
Industry watchers say that MTN’s continuous investment in growth and expansion of services shows extreme confidence in the Nigerian market. They also say that the N200 billion loan syndication is a marker as to the strength of Nigerian banks to service telecommunication businesses which are capital intensive investment areas.
“Our revenue base is still largely dominated by voice which contributes about two third of our total revenue, but what we are beginning to see is that people are not making calls as much as they used to, and are more interested in data based applications, so, as we transition into this movement, we need to invest in our network. Our view is that we must prepare for the future. If a big portion of our revenue is going to come from data and from digital services in the future, we have to start that investment now, and that is why we have taken the medium term loan,” Awobodu said.
The loan facility is structured with a two-year moratorium and a repayment plan of five years and is denominated in Naira.
MTN had in 2013, raised a total of N239 billion in loans for expansion which is said to wind down in 2019.
“We raised the loan locally and that loan is winding down next year. We have kept to the loan servicing agreement and all the repayments have been made as at when due. Final payment will be done in 2019,” Ishmael Nwokocha, MTN’s General Manager, Corporate Treasury Finance.
According to Awobodu, MTN already has Long Term Evolution (LTE) frequency in some parts of the country.
“We actually have LTE frequency, but the more frequency you have, the better services you can provide and it also helps us in terms of the coverage that we can give to the populace. So we keep looking for opportunities in the market to give us services to the outer part of Nigeria with better network quality.
What we are doing with our LTE services is that we plan to expand. We started with three cities; Lagos, Abuja, Port-Harcourt and we expanded to reach about nine or 10 cities in total, but we have cities that are still not on 4G and we would like to expand into those cities, and this is part of why we are doing this CAPEX expansion,” he said.
Analysts say that just as the earlier loan had boosted MTN’s ability to grow, increase revenue Year-on-Year, and provide expansive voice coverage as the number one telco in the country, its plans to fund its capital expenditure, working capital and evolving business opportunities including opportunities in data with the newly taken N200 billion loan will create technological advancements for the country in many more ways than one.
They say that MTN’s data driven plans has the potential to raise technology penetration to the hinterlands and encourage the take off and development of medium to highbrow businesses in the rural areas. It also has the potential to slow down the rate of rural-urban migration.
The N200 billion loan facility was provided by a consortium of banks made up of; Citibank Nigeria Limited, Diamond Bank Plc, Ecobank Nigeria Plc, Fidelity Bank Plc, First Bank of Nigeria Plc, First City Monument Bank (FCMB) Limited, FSDH Merchant Bank Limited, Rand Merchant Bank (RMB) Nigeria Limited, Standard Chartered Bank Plc, Stanbic IBTC Bank Plc, United Bank for Africa (UBA) Plc and Union Bank of Nigeria.
MTN says that the new loan arrangement will help it continue to provide optimum services and products for its over 55 million customer base.
Jumoke Akiyode-Lawanson
