Celtel Nigeria has signed a local and foreign currency syndicated loan facility, worth $1.4 billion, to finance its ongoing network roll-out.
Celtel Nigeria and parent company MTC earlier this year said they would invest $2.5 billion in the Nigerian network by the end of 2007, according to Lars Stork, COO of Celtel Nigeria. The loan facility is expected to go towards this investment, as well as to repay existing debt.
The foreign currency facility, of $450 million, was arranged and underwritten by Citigroup, which acted as sole bookrunner for the loan. The local currency facility was arranged by Celtel Nigeria and stands at $984 million, confirms Bence Katai, VP of Citigroup's CEEMEA fixed income capital markets group.
Eleven international banks supported syndication of the foreign currency facility, while 13 Nigerian financial institutions backed the local currency facility.
Celtel Nigeria also secured a bilateral facility worth $189 million for the network roll-out. Huawei Technologies and UBA New York provided $148.6 million and $40 million, respectively, in bilateral financing.
Over-subscription
Katai says both the local and foreign currency facilities were oversubscribed by more than 50%.
"The initial intention had been to size the local facility at $670 million, with the foreign currency loan being launched at $350 million," he says. "Our original aim of securing a total facility of $1 billion was significantly exceeded."
The over-subscription of the foreign currency facility enabled the upsizing to $1.4 billion. It also meant the syndicate was able to accommodate a substantial reduction (reverse flex) in the margin and commitment fees from the initially agreed terms, explains a Celtel press release.
"The interest shown by both local and international investors in these facilities is a reflection of their confidence, both in Nigeria and in its rapidly-growing telecommunications market," Katai adds.
"It is a landmark deal for the telecoms sector in a country where the majority of larger loan facilities are extended to the oil and gas sector."
Celtel International entered the Nigerian market eight months ago with the acquisition of a 65% controlling stake in Vee Networks (Vmobile Nigeria), now Celtel Nigeria.
The subscriber base of 6.5 million is expected to grow to 12 million users by the end of 2007, says the MTC Web site.
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