SA's second national operator, Neotel, has raised R7.5 billion, which it says it needs to continue implementing network infrastructure to compete with the incumbent.
Yesterday, the SNO and a consortium of investment institutions put pen to paper in a deal that will provide Neotel with debt facilities to the tune of R4.4 billion. The funding will be provided by a consortium of institutions, including Nedbank, Investec Bank, the Development Bank of Southern Africa, the Industrial Development Corporation and the Infrastructure Finance Corporation.
The additional R3.1 billion in equity has been proportionally provided by Neotel's shareholders. Tata Communications currently holds 26%; however, government is in the process of selling it the shareholding held by Transnet and Eskom (30% together).
Nexus Connexion owns 19% and, with 15% each, Two Telecom Consortium and CommuniTel are the remaining shareholders. The terms of the deal signed yesterday afternoon in Sandown were not released.
According to Neotel MD and CEO Ajay Pandey, Tata has agreed to pay the additional 30% as if it already owned the Eskom and Transnet shareholding.
“On the 12 December 2006, we signed a bridging finance facility to the value of R2 billion to get the process started of building our network. At that point already we made history as it was the largest non-recourse facilities for a start-up telecommunications project in the region, and one of the largest in SA then,” said Pandey.
This is the third facilities deal that Nedbank Capital has signed in the ICT sector recently.
On Tuesday, Nedbank signed up to provide the debt facility for satellite service provider Intelsat and its new partners to put a $250 million satellite in space. The financial institution has made provision for 85% of the project to be under debt facility.
Nedbank has also provided the facility for the long-awaited Seacom undersea cable, a project Neotel has also invested in, with the company enabling the local landing of the cable.
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